January early february 2014 progress by Ocean Pines Progress

January - Early February 2014

Vol. 9, No. 10

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www.issuu.com/oceanpinesprogress OPA president prefers total rewrite of code of conduct

THE OCEAN PINES JOURNAL OF NEWS & COMMENTARY COVER STORY

Thompson proposes $15 increase in lot assessments for next year Draft budget proposal for Fiscal Year 2014-15 includes a $25 coupon for use at the new Yacht Club and four new Public Works employees to deal with drainage By TOM STAUSS Publisher cean Pines Association General Manager Bob Thompson and his management team have drafted a proposed budget for Fiscal Year 201415 that includes a $15 assessment increase, modestly higher fees for golf and tennis, but none for aquatics, and a $25 Yacht Club coupon to be issued to OPA members who have paid their assessments in full. In a special meeting of the Board of Directors Dec. 6 at the Ocean Pines Country Club, Thompson distributed thick budget books to board members and then highlighted some of the policy initiatives and assumptions embedded within it. OPA Controller Art Carmine and Assistant Treasurer Pete Gomsak, a former OPA board member, were involved with Thompson in preparing the budget for board review. The budget is not scheduled for adoption until the board’s regular monthly meeting in late February, so that will give plenty of time for the Budget and Finance Advisory Committee and the directors to review it. Changes are likely before the final version and assessments and amenity fees are formally adopted at the February meeting. In introductory comments, Thompson said the budget reflects the fact that the OPA will be dealing with the opening of the new Yacht Club and the first full season of the new Yacht Club swimming pool. He emphasized the importance of hiring and training staff who will be able to deliver quality food with consistently good service. He also said that the OPA will need to improve marketing of the new facility. In an explanation for why he is

proposing a $15 assessment increase, Thompson said that his draft budget actually produce an $8 net decrease in the assessment just from operations. That would be offset by a $7 increase in depreciation expense, a $6 increase in new capital expenditures funded from next year’s lot assessment rather than reserves, and a $10 increase in the assessment attributable to the $25 coupon incentive program he is proposing for the Yacht Club. The result is a $15 assessment hike. Thompson later explained that the budgetary impact of the $25 coupon incentive program is only $10 on the assessment because not every property owner will redeem the coupon. He said the impact is a guess, but that the

real purpose of the coupons is to bring people into the new facility. “We hope people will be spending a lot more than $25,” he said. Thompson said his budget assumes that Billy Casper Golf will manage the Ocean Pines golf course for another year, something that has not yet been nailed down in a formal contract extension. This is not a surprise. Thompson indicated as much in public comments last year and more recently, OPA President Tom Terry retreated from earlier hardline comments that seemed to suggest he was leaning against a contract extension if the company didn’t meet its budget targets in To Page 23

A proposed code of ethics for the Board of Directors appeared to be on a fast track for approval at the Dec. 18 regular board meeting after its introduction at a work session earlier in the month. But something happened on the way to that quick approval: Reservations by Ocean Pines President Tom Terry. He says that the draft offered for board review by Directors Terry Mohr and Dan Stachurski at the board’s Dec. 4 work session is not the version of an ethics code that he wants the board to consider ~ Page 7

Yacht Club pool patrons get direct access to tiki bar

Patrons spending a lazy day lounging by the Ocean Pines Association’s Yacht Club swimming pool will be able to order food and drinks without ever leaving the pool enclosure when the reconstructed amenity opens for business this summer. The Yacht Club campus will feature an expanded tiki bar that intersects the pool deck, allowing swimmers and sun worshippers to place their orders and dine al fresco. ~ Page 12

Board dives into old controversy over pool financing

For some Ocean Pines residents, the vote by the Board of Directors in 2006 to enclose the Sports Core pool and finance it by a $500,000 bank loan and accumulated reserves is as fresh as if it happened yesterday. The Sports Core pool enclosure funding issue resurfaced for a brief reprise at the current board’s Dec. 18 regular monthly meeting. The board voted 5-1 to amend an Oct. 18, 2006, motion that dealt with how the Sports Core pool enclosure would be financed. ~ Page 27

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January - Early February 2014 Ocean Pines PROGRESS

Pine’eer Craft Club donation

At the Dec. 19 installation of officers/holiday luncheon, Nancy Welsh, president of the Pine’eer Craft Club, presented checks totaling $5,000 to organizations of Ocean Pines, from profits derived from their 2013 activities. The members voted to donate $5000 to the community, including $1,500 for the Ocean Pines Volunteer Fire Department, to assist in the purchase of cadet turn out gear and helmets; $1,200 to the Ocean Pines Parks and Recreation Department, with $500 allocated to summer concerts, $100 to the old-fashioned Christmas, $200 for the PEP, $200 for scholarships, $100 for the fall festival and $200 for Camp Ocean Pines arts and crafts; $1,500 for the Ocean Pines Police Department toward the purchase of E-Tix care printers; $250 for Neighborhood Watch, to be used to purchase magnetic signs for their vehicles and also caps for members; $350 for Public Works, in appreciation for the department’s help throughout the year, but especially the August Arts and Craft Festival, and the November Holiday Festival; and $200 for the Worcester County Veterans Memorial foundation. The donation exceeded last year’s by $1,500. Pictured are Jim Hamlin of Neighborhood Watch, Public Works Department Director Eddie Wells, Recreation Director Sonya Bounds, Mary Adair of the Veterans Memorial foundation, Ocean Pines Association General Manager Bob Thomspon, and Bill Bounds of the OPVFD.

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OCEAN PINES

January - Early February 2014 Ocean Pines PROGRESS

New Yacht Club books $300,000 in weddings and banquets OCEAN PINES BRIEFS

GM assembling names for drainage task force

In the hopes that he can begin to conduct meetings as soon as early January, General Manager Bob Thompson told OPA directors at their Dec. 18 meeting

by Thompson unless the OPA president wants it to happen.

that he has been busy assembling the membership roster of a task force called for in a board work session Dec. 4, albeit without a formal board vote. That essentially means it will be under the general manager’s control as opposed to the board’s. During the Dec. 4 work session, Director Marty Clarke proposed the idea of creating a task force of community members who have expertise in drainage. He acknowledged that he was “clearly stepping on some heels” by even putting the issue on the agenda for the work session. But he said the OPA does have a history of creating task forces to help address pressing issues, such as construction of a new Yacht Club. “We have talent in Ocean Pines that has been raising their hands to help on this drainage problem since I served on the board the last time,” Clarke said. He suggested a task force that included himself along with Directors Jack Collins and Bob Cordwell. Director Teri Mohr said that the general manager should be leading the effort to address drainage concerns and added that Thompson has “already done

a tremendous amount of work” on the issue. OPA President Tom Terry agreed, saying the problem with appointing a task force is one of “movement, progress and accountability.” He said he does not think that the board should take over the drainage issue, but that is what will happen if it appoints a task force, particularly with directors as members. “If you make it a board committee, it then becomes a board responsibility to oversee,” he said. Instead, Terry suggested a task force that would have directors appointed as liaisons and would work with Thompson to find solutions to the drainage problems in Ocean Pines. He said he planned to draft a proposal reflecting that approach for consideration at the board’s regular monthly meeting on Dec. 18. Clarke said he might have a competing proposal to offer at the same meeting. Neither happened. Instead Thompson simply announced the task force as if it had been his idea, which of course it hadn’t been. As for whether any director will serve on it, he didn’t say, but given the stated views of Terry it’s unlikely any director will be appointed

Ocean Pines Association members interested in watching their elected (and unelected) leaders grappling with the proposed OPA budget for Fiscal 2013-14 are free to attend any of the meetings scheduled for January and February in which the budget will be considered. Unless changed, all the meetings will be held at the Ocean Pines Country Club. At the Board of Directors’ Dec. 18 regular meeting, General Manager Bob Thompson released dates for budget review, beginning with the release of his draft on Monday, Jan. 6, when budget books were presented to the board and the Budget and Finance Advisory committee. The budget committee will conduct three days of meetings with department heads beginning Jan. 13 and will submit written guidance and recommendations to the board by Jan. 24. Thompson has scheduled meetings with the board on Feb. 3 and 4 to discuss the budget, and on Feb. 7 the directors

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haracteristically upbeat General Manager Bob Thompson spoke glowingly of early bookings for the new Yacht Club during his portion of the Board of Directors Dec. 18 regular monthly meeting, telling the directors and the handful of Ocean Pines Association members who attended the pre-Christmas gathering that $300,000 in weddings and similar banquets have already committed to the new venue. Thompson also said that June looks good at the Ocean Pines Beach Club for weddings, and that he’s hopeful that both amenities will perform well this coming summer. The Beach Club has traditionally been a cash cow for the OPA, especially in the area of parking passes, but that’s not been the case historically at the Yacht Club. Bolstered by a healthy rebound in the Yacht Club’s catering and banquet business, Thompson believes that a reversal of fortune is possible in fiscal 2013-14.

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6 Ocean Pines PROGRESS January - Early February 2014 the OPA’s financial officers and managOCEAN PINES BRIEFS ers do not accept. From page 5 will be issuing final guidance to Thompson. The general manager will present a revised budget to the community in a town meeting on Feb. 25, this meeting likely to be scheduled for the Assateague Room of the Ocean Pines Community Center. The board is scheduled to vote on the budget at its regularly scheduled meeting Feb. 22.

Thompson, declining to mix it up with Clarke on an issue where the two simply don’t agree, said the funds in accounts that exceed the $250,000 limit would be reallocated by the end of December, something that Clarke in early January said he believes has not occurred. “Of course, Bob doesn’t return my emails, so I don’t know for sure,” Clarke said, getting a start on the new year in much the way he left 2013.

Clarke raises issue over uninsured funds

Fire hydrant testing begins in Ocean Pines

Ocean Pines Association Director Marty Clarke, who some say has been relatively calm and civil in recent meetings of the Board of Directors, isn’t abandoning his unofficial role as OPA General Manager Bob Thompson’s critic-in-chief. During the board’s Dec. 18 regular monthly meeting, Clarke once again raised the issue that a substantial portion of OPA’s investment portfolio of CDARs and money market funds are held in accounts that exceed the $250,000 limit insured by the Federal Deposit Insurance Corporation (FDIC). He said handling the funds in that manner puts those funds at greater risk than they need to be, an assertion that

The Worcester County Water and Wastewater Division will begin conducting flow tests on various fire hydrants throughout Ocean Pines on Jan. 13. These tests should be completed within a week. During flow testing, customers may temporarily experience periods of reduced water pressure and cloudy water. If the problems persist, call 410-6415251 to report the situation.

Light up the Pines winners announced

The Ocean Pines Association has announced the winners of its annual “Light up the Pines” outdoor display contest. This year, area residents were given the

OCEAN PINES chance to vote for all of the winners in the contest’s four categories. The home of Lee and Barb Phillips, located at 76 Ocean Parkway, received the most votes in three of the four categories - people’s choice, most creative and most lights. The home of Ron and Barbara Ferger, located at 5 Oxford Court, received the most votes in the allaround top notch category. The winners will be given a gift bag and a gift card good at any Ocean Pines amenity. Approximately 350 votes were cast in the contest, which was open to all Ocean Pines residents. Subscribers to the Ocean Pines Association’s email list received a link to the online ballot. People could also vote by visiting the Ocean Pines website and via text messaging. The last date for voting was Jan. 1.

OPA, BJs Wholesale Club raise $440 for memorial

BJ’s Wholesale Club, in partnership with the Ocean Pines Association, raised $440 for the Worcester County Veterans Memorial at Ocean Pines as a part of its recent membership offer. BJ’s donated $5 of each membership fee paid as a part of the promotion to the foundation in addition to offering special benefits for new and renewing members. Over 80 area residents participated in the offer, making such a large donation possible. Teresa Travatello, director of Marketing and Public Relations for Ocean Pines, presented the check to Veterans Memorial volunteers Mary Adair and Marie Gilmore at the organization’s volunteer appreciation party at DeNovo’s in Ocean Pines on Dec. 4. Although Ocean Pines has partnered with BJ’s before to bring special membership offers to area residents, this is the first time such an offer has included a donation to a local organization.

Garden Club to offer $1500 scholarship

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Once again this year, the Ocean Pines Garden Club will present scholarship funds to a qualified graduating senior of Stephen Decatur High School. Earlier, the club had announced that there will be two $1000 grants offered. Instead the club has determined that one scholarship in the amount of $1500 will be given. The purpose of the OPGC’s scholarship program is to stimulate interest in gardening, horticulture, agriculture, and the conservation and protection of the environment. Applicants should be a full-time resident of Ocean or the child or grandchild of a non-resident who is an active member of the club. The award may be used by the recipient to defray expenses at any approved degree or certificate granting college or university, technical or vocational school. Applicants who apply and address the stated purpose of the program will be considered by a selection committee composed of members of the OPGC as

Ruling the roost

Ravens Roost #44, Ocean City, won first place in the adult community group xategory in the Atlantic General Hospital Penguin Swim on New Year’s Day. The Roost donated over $9,500. Pictured is Ravens Roost #44 Penguin Swim chair Gary Miller, of Ocean Pines, displaying the first place trophy.

designated by the president of the club. An application form must be submitted to a senior guidance counselor at Stephen Decatur High School by April 22, 2014.

Festival of boats planning continues

The Ocean Pines Boat Club is looking ahead to summer days and is continuing with its plans to revive the annual boat parade. Now named “The Festival of Boats,” the boat parade was a signature summer event for many years in Ocean Pines and is scheduled for July 26. The activities, which will include both water and shore festivities, will be centered in the South Ocean Pines waters with the thought of alternating north and south in future years. The southern waters are a bit more confining than the north, but the planned route has been surveyed and, with due diligence, appears very do-able. The current plan is for all decorated participating boats to assemble in the Pintail Park Canal prior to the start of the parade. The boats will be sequenced into the charted route and will eventually pass by the judge’s station located at the end of the Grand Canal close to Ocean Parkway. At the conclusion of the parade, all interested parties will gather at the Ocean Pines Yacht Club deck for the announcement of the winning boats and trophy presentations. Plans are being formulated for additional festivities during and following the presentations. The event is open to all Ocean Pines businesses, all members of the Ocean Pines Chamber of Commerce, all Ocean Pines organizations and individual Ocean Pines boat owners.

January - Early February 2014 Ocean Pines PROGRESS 7

OCEAN PINES

Hingham Lane improvements performing well By TOM STAUSS Publisher his time it wasn’t General Manager Bob Thompson who was reading from the rosy scenario playbook. While stopping well short of hyping what seemed to be something less than good news, he nonetheless recently sent up some warning flags on the efficacy of just completed drainage improvements on Hingham Lane.

General manager reported standing water along the street recently upgraded with drainage improvements and wondered whether the OPA ‘got the result’ it was looking for. It turned out a quick fix was all that was needed to get the water flowing according to specs At the Dec. 18 monthly meeting of the Board of Directors, the Ocean Pines Association’s general manager expressed concern about standing water present

along the street, which is the only access street off Ocean Parkway that allows traffic in and out of the Innerlinks section of Ocean Pines.

The standing water was a concern because Hingham Lane late last year was substantially upgraded with drainage improvements that were part of a larger project that rebuilt the 11th and 12th holes on the adjacent Ocean Pines Golf Course. Trying not to alarm directors unnecessarily, Thompson couched his expressions of concerns by asking a series of To page 8

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8 Ocean Pines PROGRESS

OCEAN PINES

January - Early February 2014

Hingham Lane From Page 7 questions that he said require answers from the original contractor, McDonald and Sons. The Hingham Lane portion of the contract was completed by a local sub-contractor, Goody Hill, whom Thompson did not mention in his brief remarks to the board. The general manager’s initial question was whether the standing water discovered after the project was completed was a part of the design. He then posed the question of whether the standing water was expected and only a temporary condition. After expressing the hope that discussions with McDonald and Sons would yield satisfactory answers, Thompson posed the question that encapsulated the situation as he seemed to see it: “Did we (the OPA) get the result that we’re looking for?” It turns out that the OPA is more than satisfied. Thompson met with the engineers who had designed the project on site. They discovered some cloth material that was obstructing the water flow in a particular area, removed it, and almost instantly the problem was resolved. If only everything in Ocean Pines could be resolved so easily and so quickly. OPA President Tom Terry told the Progress in early January that Hingham Lane area residents who had been complaining that the project had seemingly done little to solve their backyard drainage issues called him to tell him of significant improvements. “Whatever Bob did with the engineers seemed to have fixed the problem,” Terry said. “Usually we hear from people when something’s not right, so for people to be calling with compliments is very much appreciated.” The questions posed by Thompsonin his comments to the board were hardly academic, as the combined golf course-Hingham Lane project is costing Ocean Pines property owners $595,000, after the board approved a cost overrun for the Hingham Lane component in October in the amount of $75,000, large-

ly the result of additional engineering studies needed to fix problems with the original design. In spring of last year, the original project cost had been estimated at $450,000 for golf course drainage improvements. Thompson then sold the board on another estimated $90,000 for the Hingham Lane improvements, telling the board that they were needed to ensure that the golf course stormwater would drain properly. He also told the directors that both project components would work together to improve drainage in the back yards of homes that line the golf course. That’s been the consistent mantra of the OPA since embarking on golf course drainage improvements in the early 2,000s. The board approved the add-on Hingham Lane component with little or no debate. Director Marty Clarke groused about the unbudgeted cost overrun, but that was the extent of the dissent. With the additional $90,000, the total estimated project cost at the time stood at $540,000, but in remarks to the board in October, Thompson supplied numbers that had the actual contracted amount for the project at $520,000. That was based on a $332,000 McDonald and Sons contract, $116,000 in OPA Public Works expenses, and $72,000 for three separate engineering studies related to the project. After permitting issues with the state necessitated the drafting of two additional engineering schematics, Thompson said that all but $19,373 had been spent of the $520,000. That amount, he informed the board, would be insufficient to “get pipes in the ground.” The additional cost of doing that, he said, would be $94,750. That’s equivalent to a $75,000 overrun when the $19,373 in remaining funds was factored in. The result was a total project cost of $595,000. He gave the board a bit of a Hobson’s choice: Either the directors approve the cost overrun in the current fiscal year or wait to fund the Hingham Lane component in next year’s budget, which would have delayed the project completion an-

Standing water that had collected along a section of Hingham Lane raised questions about the efficacy of recent drainage improvements in the area. Project engineers fixed the problem within a few days of its discovery and water began ﬂowing freely consistent with the project’s design. other six months or more. After minimal grousing from the directors, most of that again coming from Clarke, the directors unanimously approved the overrun. The $75,000 overrun was sprung on the board with little or no public indication from Thompson that it was coming. Thompson told OPA directors at their Sept. 18 monthly meeting that the OPA

had received permits for the Hingham Lane phase from the state on Sept. 17, and that work to install the underground drainage pipes along the street would begin Sept. 20, with roughly two weeks needed to complete the job. For much of the summer, the OPA was waging bureaucratic warfare with state regulatory officials to obtain the To Page 12

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OPA president prefers total rewrite of proposed code of conduct over draft offered by two directors Terry suggests ‘blank sheet of paper’ as starting point should board decide to revisit controversial means of regulating board behavior By TOM STAUSS Publisher

proposed code of ethics for the Board of Directors appeared to be on a fast track for approval at the Dec. 18 regular board meeting after its introduction at a work session earlier in the month. But something happened on the way to that quick approval: Reservations by Ocean Pines President Tom Terry. He says that the draft offered for board review by Directors Terry Mohr and Dan Stachurski at the board’s Dec. 4 work session is not the version of an ethics code that he wants the board to consider. In a brief conversation with the Progress after the Dec. 18 board meeting, Terry suggested that he is not absolutely convinced the board needs to adopt an ethics code; but if it does, he said the directors should “start on a blank piece of paper” rather than use the code that was in force for about a year and a half and abolished in mid-2007 as the template for a new version. With several additions to the 20062007 code language by Stachurski, it is precisely that template that Mohr circulated to her colleagues during the work session. Terry said he would have voted against the old version of the code for a number of reasons, including the fact that it would have outlawed board members, in public OPA meetings, from wearing a pin or campaign buttons for someone running for the board of directors. He also said that he did not want the discussion of a new code of ethics to

be viewed as a way to muzzle Director Marty Clarke or the free-flow of board debate and discussion generally. During the Dec. 4 work session, Clarke seemed to be of the view that he was the target of the new effort by Mohr and Stachurski to draft a new ethics code. When challenged by an OPA member on that point, Mohr denied that was the intent. Stachurski was absent from the meeting but, in a subsequent conversation with the Progress, he said that any director who revealed confidential board information without majority authorization would run afoul of the revised code. Terry said he did not want the drafting of a new ethics code to become divisive in the community. He said that the best time for the board to consider a new code would be when the directors are working well together, even when they may disagree on certain issues. As a product of the corporate world, Terry said he is used to working under a code of conduct and would not find it difficult to work under one now. “Yes, it can be abused, but I would hope that Ocean Pines would elect directors who would act responsibly,” he said. Terry said that a new ethics code should target the need to ensure board confidentiality in certain matters, such as when an OPA employee makes a complaint about a superior or colleague and does not want that complaint to be made public during a board review. If employees believe that the complaint will become public or fodder for comment and controversy in the media, they may not come forward to rectify possible wrongdoing, Terry said. “We should be able to deal with such matters in closed session,” he said, “without the media” publishing the details. While he acknowledged that much of the media would probably elect not to publish certain kinds of material, espeTo Page 11

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OCEAN PINES By TOM STAUSS Publisher he Ocean Pines Association’s Board of Directors in a 5-1 vote Dec. 18 modified the terms for financing this fiscal year’s golf course drainage project. The vote did not change the previous boards’ decision to pay for the project through in-house financing, which essentially means the OPA is borrowing the money from itself and repaying itself, at an interest rate of less than 1 percent, rather than borrowing the money from a commercial bank at a much higher interest rate, probably around 6 or 7 percent. In what was intended as a housekeeping measure and to provide more detail to the previously adopted inhouse financing scheme, the board voted to boost the amount that could be borrowed in-house from $540,000 to $615,000. The motion offered by Director Bill Cordwell, the OPA treasurer, also set the payback period to 25 years and the interest rate to correspond to the average annual return on the OPA investments, currently less than 1 percent. The interest rate would be adjustable every year in December throughout the term of the in-house loan.

Code of conduct From Page 8 cially if it was of a personal or embarrassing nature devoid of policy implications or OPA operations, he was less sure that such forbearance would be universal. “So an ethics code would make sense” to deal with such a scenario, he said. He declined to address what has been an issue from time to time over the course of many board terms: accusations that certain board members have leaked information to the media that revealed other kinds of “sensitive” material, not necessarily related to personnel matters. The most recent example occurred more than a year ago, when Clarke was thought by some colleagues to be the source of leaked media reports that the board had made an offer to purchase the former Pine Shore Golf Course just north of Ocean Pines for roughly $1.4 million. Other allegations against Clarke also were reported to involve comments he allegedly made critical of General Manager Bob Thompson. According to media reporting at the time, Clarke was the subject of ethics complaints by three of his colleagues and Thompson. In theory, the complaints could have led to a vote to remove Clarke from the board, but a 28-page investigative report by OPA General Counsel Joe Moore apparently revealed no grounds for removal. No motion for Clarke’s ouster was made during a closed meeting of the board on Jan. 8 of last year when Moore’s report was addressed. The complaints first surfaced in November of 2012. A vote to expel any director from the

January - Early February 2014 Ocean Pines PROGRESS

Board modifies terms for funding this year’s golf drainage project

The previous board action had only specified in-house financing without specifying terms. The higher amount to be financed in-house reflects the increased cost to complete the Hingham Lane component of last year’s golf drainage project that also included rebuilding the fairways of holes 11 and 12 on the Ocean Pines golf course. The board late last year approved a $75,000 overrun on the Hingham Lane section, which increased the authorized expenditure from $540,000 to $615,000. Actually, OPA General Manager

Bob Thompson during the Oct. 24 regular monthly meeting presented a cost breakdown that had the project totaling $520,000, $20,000 less than what the board’s motion on Dec. 18 authorized. If that’s what the final cost turns out to be, that is the amount that would be used for purposes of self-financing, a source told the Progress in early January. Of the six directors present to vote on the Cordwell motion, which Cordwell confirmed later had been drafted by former OPA Director and current Assistant Treasurer Pete Gomsak, only Marty Clarke opposed it. He said the OPA

“shouldn’t be borrowing from ourselves when we have $7 million in the bank that’s earning less than 1 percent.” Earlier in the meeting, Clarke had used a higher number, $9 million, to describe the OPA’s current investment portfolio. According to the OPA’s December balance sheet, the OPA had $3,299,010 in operating cash as of Dec. 30 and $5,055,589 in short-term investments, which include CDARS and money market funds. Clarke said he had voted against inhouse financing when it was first proposed and wouldn’t change his position now that the project cost has grown by $75,000. Director Sharyn O’Hare said she would support the motion because it “clarified” previous board financing policy. Director Jack Collins also said he supported the motion because the project benefits property owners who live along the golf course. Not present at the meeting was Director Dan Stachurski, who was making his way down to Florida by boat via the Inner-coastal Waterway during much of December. In a telephone interview with the Progress, Stachurski said as a To Page 12

board requires a supermajority of five directors, according to OPA bylaws. Short of expulsion, there is no provision in the bylaws that permit or authorize any action against a director for any reason, and the same bylaws do not define the cause that might justify expulsion. Stachurski told the Progress he’s heard a number of dissertations on the subject of “cause” by Moore and still has no clear idea on what it encompasses. The draft code of conduct as revised by Stachurksi, depending on how it’s interpreted or applied, could give a board majority or supermajority of five directors a clearer path for censuring or removing an offending board member. It appears to establish unauthorized release of confidential board information as grounds for removal or at least a determination by a board majority that a violation of the code has occurred. In a conversation with the Progress after the Dec. 4 work session, Stachurski said that was his intent in revising the old code in the way he did. The proposed code, which has been posted on the OPA Web site under the board of directors section, covers such topics as candidate endorsements by directors at official board meetings, which are prohibited; confidentiality of privileged information, conflict of interest, courtesy, OPA employment, gratuities, fair dealing, free food or drink (which are banned), objectivity and violations. New language in the confidentiality section of the code cites an example of privileged information that a director would be prohibited from disclosing publicly without a board majority vote authorizing it. The new language, as proposed by

Stachurski, cites privileged information “such as that obtained or discussed in closed sessions of the board.” The code sets out a process for handling accusations against a director for violating the code. When Clarke was brought up on charges a year ago for alleged violations, it was the process used, even though there was no authority for it at the time because the old code had been abolished. The process includes an investigation by the OPA general counsel of the alleged violations. The accused director would have the right to question his or her accusers and to be presented with all the evidence against him 15 days prior to a hearing on the charges. According to the posted draft, the accused director would be “presumed innocent until and unless found by majority vote of all non-accused members of the Board to be guilty of the charges made against him or her.” A majority decision to find a director guilty of violating the code would not necessarily remove him from the board. Indeed, if that were the case, the proposed code would violate the OPA bylaws, which specify that only a super majority of the board – five members – can vote to remove a director. The new section added by Stachurski seems to recognize the super majority requirement for removing a director. “If removal from the Board is considered appropriate, the vote to approve such action shall be a majority plus one vote,” the new language in the draft code says. Had this revised language been in force in January of last year, it’s anyone’s guess as to whether it would have

been sufficient to remove Clarke from the board, given that Directors Dave Stevens and Ray Unger were unlikely to vote to do so. But it’s very possible there would have been four votes, a bare majority, in favor of a determination that Clarke had violated the code by revealing confidential board information. That determination would have had little practical effect. Mohr said during the Dec. 4 work session that she believes the OPA needs to have in place a code designed to govern how directors behave and establish reasons for their removal from office. “We used to have it and now we don’t,” she said, adding that “it worked for the years that it was in there.” That latter statement is debatable. In fact, Stachurski was one of a unanimous board of directors that voted to abolish the code precisely because its members felt it had been abused and that only members of the OPA voting in referendum should have the right to remove directors. Mohr said it is not required that the OPA have a code of conduct, but argued that it’s recommended for homeowners associations to do so by organizations including the for-profit Management Trust. Clarke, who is sure to resist any resurrection of a code that he is convinced would be used against him, said the OPA’s bylaws say “exactly the same thing” as the code of conduct being proposed by Mohr. He said the bylaws set provisions for the removal of directors from office, either by petition of OPA members or for cause by an affirmative vote by a super majority of the sitting board.

In what was intended as a housekeeping measure to provide more detail to the previously adopted in-house financing scheme, the board voted to boost the amount that could be borrowed internally from $540,000 to $615,000

12 Ocean Pines PROGRESS

OCEAN PINES

January - Early February 2014

Yacht Club pool patrons to have direct access to tiki bar Pool users will be able to order drinks and food without leaving the fenced-in pool area By ROTA L. KNOTT Contributing Writer

atrons spending a lazy day lounging by the Ocean Pines Association’s Yacht Club swimming pool will be able to order food and drinks without ever leaving the pool enclosure when the reconstructed amenity opens for business this summer. The Yacht Club campus will feature an expanded tiki bar that intersects the pool deck, allowing swimmers and sun worshippers to place their orders and dine al fresco. General Manager Bob Thompson during a Dec. 18 board of directors meeting announced that the tiki bar will be situated between the new Yacht Club and the adjacent swimming pool. It will be placed at an angle similar to that of the main building and will be constructed as part of the swimming pool fencing. He said that will allow members at To Page 14

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Hingham Lane From Page 8 needed permits. The general manager recently said state regulators even staked out drainage ditches as wetlands. Late in September, Thompson responded when asked by the Progress to explain why there was no evidence of activity on Hingham Lane. He alluded to some behind the scenes activity needed to coordinate the contractor’s return to the job site, adding that he thought the work would commence in early October. The project did not come up for any discussion at the board’s Oct. 2 work session, nor had it started by early October or by the board’s regular meeting on Oct. 24. There was no public explanation given in the interim, but the absence of any activity on the job site was notable. The reason for that became evident soon enough. Thompson’s earlier comments on when the project would start were simply incorrect, probably based on an assumption that the contractor, McDonald and Sons, could be back on site almost on a moment’s notice. Sources have told the Progress that the reason the project had been delayed is that McDonald and Sons, the contractor that did the work on the 11th and 12th holes, was working out of state and could not return to Ocean Pines just because the state had finally issued a permit and that new Hingham Lane engineering was in place. Thompson told the board during its Oct. 24 regular meeting that the Hing-

ham Lane component could begin shortly, but that McDonald and Sons would not be doing the work. During his Oct. 29 town meeting, Thompson said that “McDonald and Sons rebid” the Hingham Lane project, but said the contractor would be on site to oversee the work. The project was started in November and was completed sometime around the first of December. The contractor hired for the job, Goody Hill, is a local company that razed the old Yacht Club and did much of the excavation work for the new facility.

Golf drainage From Page 11 house-keeping measure he probably would have voted for the motion even though he has reservations about inhouse financing in which one part of the OPA budget pays interest and principal payments to another. He said given the OPA’s very healthy balance sheet, he believes it would make more sense financially to simply pay off in-house loans from the reserves, thereby simplifying OPA financial reporting, which he acknowledges very few people pay attention to. “I think it’s kind of silly for one part of Ocean Pines to be paying interest to another part,” he said, adding that before his term ends this summer he may propose that the OPA simply pay off both the golf drainage loan and the commercial bank loan that is financing half the cost of the Sports Core pool enclosure.

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14 Ocean Pines PROGRESS Tiki bar

OCEAN PINES

January - Early February 2014

From Page 12

the pool to “come up to the bar and order drinks and food without having to come out of the pool area.” Thompson said the design of the new tiki bar will be similar to that of the structure that was located at the old Yacht Club. But having it positioned as part of the pool fencing will allow employees to serve customers from both sides. He added that the design will include a somewhat larger roof overhang in order to provide more coverage from the elements for patrons when they are sitting at the bar. The Yacht Club implementation team is helping to finalize the tiki bar design as well as the furniture layout, kitchen equipment, cable television, alarm system, phone system, kitchen flooring, lighting and other elements of the building. One change that has been made in the interior design is a switch from tile flooring to a poured concrete with epoxy coating for the second floor kitchen. Thompson said that would pre-

vent any second floor leakage from spilling through to the first floor ceiling. During the meeting the board finally accepted a series of color selections for interior elements of the Yacht Club as recommended by the implementation team. All very similar in color palette, the materials included options for tile and wood flooring, countertops, paint and carpet. On the first level of the new Yacht Club, the flooring will be a grooved ceramic tile, while the second level flooring will be a dark oak wood. The ceramic tile for the first floor has heavy grooves so it will not be slippery. The only portions of the building that will be carpeted are the offices and the bridal suite. The countertops and bar tops throughout the Yacht Club will be Silestone. Other construction completed or under way at the new Yacht Club includes the cupola and framing of the tower. Exterior windows and doors are also being installed and much of the electrical and plumbing work is

complete. Meanwhile, Thompson is looking to hire several key employees for the restaurant. He said he is currently interviewing for banquet and event sales positions as well as interviewing for an executive chef. He said it is important to bring on the executive chef soon, because that person will assist with the final restaurant menu selections as well as assist in hiring of all kitchen staff. Thompson said he is also beginning work on the interior design of some elements of the Yacht Club including display areas for historical artifacts. He said he will be meeting with several residents who have interior design experience to get their help with that portion of the project. Board members have directed Thompson to make space in the new building to display a model boat that hung over the bar at the old Yacht Club along with other artifacts of the early years. The model boat was given to Ocean Pines by the community’s early developers Boise Cascade and

was originally located at The Goose Hangs High in the Yacht Club and later bar areas in the now-gone building. When the old Yacht Club was razed, the model boat fell off of its mounting and was being thrown away. It was rescued from the refuse pile by a local resident, carpenter Mike Hordeman, who restored it at his own cost and is willing to give it back to Ocean Pines for display. Clarke said a date of 1949 is engraved on the hull of the model vessel, and he is doing some research to try to determine who was the general manager working for Boise Cascade at the time the boat was given to Ocean Pines. Clarke said the model vessel is “probably the most valuable or unusual artifact that we have from Boise.” Other artifacts that will be placed on display include land transaction documents recently donated to the OPA by Taylor Bank, an old promotional sign, the first flag that flew over the Worcester County Veterans Memorial and a governor’s citation for the memorial.

OCEAN PINES

January - Early February 2014 Ocean Pines PROGRESS 15

OPA director is not joined by his colleagues in critiquing the detailed compilation of actual and estimated costs of what is now just short of a $4.8 million project By TOM STAUSS Publisher

n a barbed critique of the latest “dashboard” that shows the latest compilation of actual and estimated costs associated with building the new Ocean Pines Yacht Club, Director Marty Clarke calls it confusing, says it may be hiding cost overruns that have yet to surface, and even goes so far as to say that it allows General Manager Bob Thompson to escape accountability for overruns that have already been identified and approved by the Board of Directors. None of Clarke’s colleagues are joining in the criticism of the dashboard, which is largely the handiwork of Ted Moroney, one of the members of Thompson’s Yacht Club implementation task force and a non-resident property

owner whose construction business is based on the Western Shore. OPA President Tom Terry said he’s looked over the dashboard and finds it to be an accurate portrayal of where the project stands. “I am very pleased with the way the project is being managed,” he said. “Allowing for the additional funding we approved for new kitchen equipment, it appears that the new Yacht Club is coming in on budget.” He said had Thompson not at least tried to include the old kitchen equipment in original planning, he would have been criticized for not doing so. Perhaps the most likely board member to agree with Clarke, Director Jack Collins, isn’t joining in with Clarke’s latest criticism.

“Jack told me he had no problem with it,” Clarke told the Progress. That left alone among the directors, a position that is not all that unfamiliar to the outspoken director. He’s been a critic of the project for some time. Clarke was a proponent of rehabilitation of the old building as opposed to building a new two-story two-kitchen facility that is scheduled for completion and occupancy in early spring. He is unhappy with recently approved cost overruns for new kitchen equipment exceeding the $4.3 million approved for the project in a 2012 property owner referendum by just short of $400,000. More recently, Clarke was part of an effort, joined by a board majority, which resulted in the reconstituting

Faced with the fact that he is alone in his opinions about the dashboard, Clarke said he isn’t giving up and expects to be proven prescient as the construction continues and future dashboards are produced. The December dashboard as of the first week of January had not yet been posted on the OPA Web site, which

Clarke says December Yacht Club dashboard is confusing and lets GM off the hook for overruns

of the implementation task force after Thompson and Moroney had a falling out. That relationship has since been patched up, reportedly with some behind-the-scenes influence wielded by Terry. Clarke said that he has discussed the dashboard with Moroney but was unable to convince the task force member that it was anything but an accurate financial depiction of the Yacht Club project to date. “He sent me an email trying to explain it that I found just as confusing as the dashboard,” Clarke said. He acknowledged that other directors have either indicated that they disagree with his conclusions or haven’t responded to his emails. A pre-Christmas attempt to discuss his concerns with Director Sharyn O’Hare was unproductive as she was busy wrapping Christmas presents when he called to chat, Clarke said.

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16 Ocean Pines PROGRESS January - Early February 2014 tion to go with virtually all-new equipYacht Club dashboard From Page 15 Clarke said is evidence that Thompson doesn’t want OPA property owners to focus on the project and why its costs are significantly higher than the $4.3 million approved by property owners in referendum. Clarke said there have been significant changes in the way the dashboard was presented in November and the December version. The changes in his opinion are designed to confuse and obfuscate, while Moroney, Thompson and the other directors believe the dashboard presents an accurate depiction of costs that have been incurred or identified thus far, along with estimated costs of some remaining items. The Progress is publishing the December dashboard [see below] in this edition to allow OPA members to draw their own conclusions. “The type is tiny, very hard to read,” Clarke warns. “A magnifying glass would help, but even then the membership will have trouble getting the numbers to add up. I sure did.” The major difference between the two dashboards is that the December version reflects the recent cost overrun associated with new kitchen equipment that the board approved in November. Concluding that they had little choice but to accept Thompson’s recommenda-

ment in the new facility’s two kitchens, the directors approved a change order that represented a $385,000 increase in the cost of the project, taking it to just short of $4.8 million. The portion of the kitchen change order related to new oven hoods, $80,925, is included in the total amount obligated to Harkins Construction, the project’s lead contractor, to date. The Harkins’ obligation is currently listed at $4,085,279, and also includes relatively minor change orders for an epoxy floor covering in the upstairs kitchen ($2,045), soda lines ($8,469.50) and flagpole extensions ($1,500). These costs are itemized in Section III of the dashboard. In the next section, IV (other), the dashboard lists $672,678 in various costs, some estimated, needed to complete the project, including all the kitchen costs, with $80,925 allocated to Harkins for the oven hoods and another $396,137.94 to Singer Equipment Co., which Thompson has confirmed is the company from whom the OPA intends to buy the rest of the kitchen equipment, on advice of kitchen consultants Savoy Brown. Total kitchen costs, including plumbing and electrical and equipment hookups, come to $509,578.24, although that number does not appear in the dashboard. The $677,678 in other costs include

OCEAN PINES an estimated $37,000 for new furniture, an estimated $18,600 for moving and reinstalling equipment, an estimated $76,000 for low voltage wiring, $1,500 for the flagpole extension, $15,000 for outdoor sign wiring, and $15,000 for signage. The kitchen cost of $509,578.24 is by far and away the most significant expense in this section of the dashboard. Some of the numbers included in Section IV are also listed in Section 11 that itemized the total Harkins’ obligation. The duplication, though confusing on first glance, is at explained by the fact that Harkins is installing the oven hoods, while other kitchen-related invoices will be paid directly to the vendors supplying and installing the rest of the kitchen equipment. Section IV offers a very detailed breakdown of costs related to the kitchens for those who might be interested. Section V of the dashboard, the summary, includes a number that subtracts or backs out any duplication of costs listed in Sections III and IV. That figure, $579,737.84, is identified as the remaining project costs, actual and estimated, other than those obligated under the Harkins’ contract or through approved change orders. The dashboard does not show the arithmetic that produces that number, but a Progress analysis indicates the numbers add up. Together, the Harkins obligation

The December, 2013, Yacht Club dashboard showing project expenditures to date and estimated remaining costs.

($4,085,279) and other costs, actual and estimated ($579,737.84) total $4,665,016.84, which as of December is the OPA’s best guess of how much the project is costing to date. That number will almost certainly change as estimates turn into actual costs incurred. According to Section V, there remains $105,280.16 in contingency funds that, if spent in their entirety, would bring the total project cost to $4,770,297, which is the current authorized total. Clarke said he is bothered by the fact that should the final cost come in at $4,770,297 or less – a possibility he regards as unlikely at best – Thompson and some directors will attempt to claim that the project came in under or at budget. “That will be completely false,” he said, noting that the kitchen cost overrun is a significant one and “someone should be held accountable for it.” He also said that it appears the board is going along with a suggestion from Thompson that the OPA lease new dishwashing equipment rather than purchase it, which he said would add another $80,000 or so to the bottom line cost. He also said he wonders whether the $37,000 budgeted for furniture will suffice and that OPA members should also be wary of pending change orders related to landscaping. Thompson has said there should be no “surprises” for the rest of the project.

January - Early February 2014 Ocean Pines PROGRESS

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OCEAN PINES

January - Early February 2014

OPA FINANCES

OPA records fifth straight positive operating variance By TOM STAUSS Publisher he Ocean Pines Association’s financial report for November, seven months into the 2014 fiscal year, resulted in another positive operating fund variance, the fifth consecutive month the OPA has performed better than original budget forecasts. November’s operating variance was a positive $43,973. Revenues were under budget by $2,700, but total expenses were under budget by $46,673, a result that adds to the cumulative positive variance for the year so far. According to the financial summary prepared by OPA Controller Art Carmine and distributed to the Board of Directors in mid-December, the variance to budget through Nov. 30 is a positive $78,695, an increase from the positive variance of $34,722 through October and September’s cumulative negative variance of $37,248. For the year through November, revenues are under budget by $345,971, virtually the same number as recorded the previous month, while total expenses are under budget by $432,742. New capital expenditures, those funded out of this year’s annual assessment rather than reserves, are over budget by $8,077. All the fee-based amenity departments except for Beach Club parking lost money for November, as did all assessment-based departments, with the exception of general administration. But led by the Yacht Club’s $27,156 positive variance to budget, all the other departments either did better than budget or generated deficits to budget of relatively insignificant amounts. Of the three major amenity departments, golf and related food and beverage lost the most in November. Its $40,847 actual loss for the month was under budget by a relatively modest $2,833. Cumulatively, through seven months, golf has lost $71,467, which contrasts with the budgeted surplus of $31,956. That’s a $103,423 negative variance to budget. Aquatics lost $30,641 in November, close to the budgeted $28,848 loss, a $1,793 negative differential. For the year so far, aquatics has an operating deficit of $42,769 and a negative variance to budget of $24,862. Yacht Club operations, shifted to the Country Club this winter while the new Yacht Club is under construction, lost $19,886 for the month. Yacht Club operations originally had been projected to lose $47,041 in November, and that better-than-budget performance resulted in the $27,156 positive variance to budget. Cumulatively, the Yacht Club’s actual

operating deficit for the year is $64,156 and its negative variance to budget is $38,544. Tennis, marinas, Beach Club parking and Beach Club food and beverage operations are for the most part closed for the season and Carmine’s report shows only minimal financial activity for them. Status of reserves – The reserve summary released as part of the November financials shows that the OPA’s reserve balance stood at $5,922,921, a

decline from the $6,114,039 October balance and September’s $6,721,113 balance. Lot assessment dollars flow into the reserves at the beginning of the new fiscal year in May, boosting reserve totals that then decline over the course of the fiscal year as expenditures occur. The balance in the roads reserve through Nov. 30 was $66,902, virtually unchanged from prior months. The bulkhead and waterways reserve through November stood at $899,332, a decrease from October’s $1,028,043 balance. The golf drainage reserve carried a

OPA Net Financial Operations through November 30, 2013

$635,248 deficit through November, the future projects reserve was $59,934 in the red, and the operating recovery reserve stands at zero. The major maintenance and replacement reserve remains as the OPA reserve most flush with earmarked assessment dollars. Its Nov. 30 balance was $5,651,869, comprised of $5,267,178 in funded depreciation and $384,691 attributable to the five-year funding plan. This reserve showed relatively little change from October. This reserve will be substantially reduced by the end of the year as

Cumulative surplus for the year close to $80,000

OCEAN PINES

January - Early February 2014 Ocean Pines PROGRESS

Revised investment policy resolution pulled from board agenda in December Cordwell says draft F-01 document will be sent back for some revisions By TOM STAUSS Publisher he Board of Directors in December had what, by recent measures at least, was a relatively short meeting, roughly two hours in length. One agenda item that could have extended the meeting much longer was effectively pulled from consideration by its lead sponsor, Ocean Pines Association Director and Treasurer Bill Cordwell. With no fanfare and only a brief explanation by Cordwell, draft resolution F-01, concerning a revised investment policy resolution for the OPA that has been roundly criticized by Director Marty Clarke, apparently has been sent back for a partial rewrite. Cordwell only said the draft measure, approved by the board in November on a 5-1 vote, had some issues that need to be resolved before he is comfortable in submitting it to the board for approval on a second and final reading. He did not say when he expected the draft to be resubmitted or who would be doing the wordsmithing. The draft resolution F-01 is a more generalized statement of OPA objectives in establishing guidelines for the investment of operating funds and reserve funds in excess of balances maintained in general OPA checking accounts. It does not mandate any particular kinds of longer term investments, leaving that matter to a separate agreement that would be negotiated with a management firm that would be hired to manage the OPA’s longer term investments. The policy resolution distinguishes between OPA funds that are expected to be spent during the current and subsequent fiscal years and funds to be spent three years and beyond. It says that “capital preservation” is the sole investment objective of the short term funds, while longer term funds have a primary goal of “capital preservation” and a

OPA finances From Page 18 expenditures related to the new Yacht Club continue. Status of balance sheet -Meanwhile, the OPA has a very healthy balance sheet, reflecting $30.88 million in total assets balanced by the same amount in liabilities and owners’ equity. Current assets include $3,299,010 in operating cash, in addition to investments in CDARs and money markets totaling $5,055,589. Accounts receivable in overdue assessments totaled $1,213,249, a slight improvement over November’s numbers.

secondary goal of “maintaining the purchasing power of these funds.” The latter language implies a willingness to consider investments with higher yields, something the committee in meetings throughout the year has said can be done without any significant increase in risk. Clarke disagrees, and he said so again at the board’s November regular meeting. No other director at the time weighed in for or against Clarke’s point of view, but it’s possible that some of his

concerns will be addressed in the revised draft. When the board discussed the draft F-01 at its Nov. 20 monthly meeting, Clarke focused not so much on wording in the draft but on a list of potential investments that he said was discussed by the committee earlier this year when the revised resolution was initially presented. Clarke insists that the OPA should not change its current policy of investing only in federally-insured instruments or CDARs.

The draft F-01 resolution continues the current practice of investing the shorter term funds in CDARS (Certificates of Deposit Account Registry Services) or in securities guaranteed by the federal government. These funds would continue under the management of the treasurer and controller of the OPA. The longer term investments, in a proposed change in policy, would be managed by a third party, professional investment firm, approved by the board of directors, that would be required to submit detailed monthly fund performance reports to OPA. Fund performance would be reviewed quarterly by OPA management and the budget and finance committee. According to the draft resolution, the budget and finance committee would be To Page 22

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January - Early February 2014

January - Early February 2014 Ocean Pines PROGRESS

22 Ocean Pines PROGRESS

January - Early February 2014

Investment policy From Page 19 required, at least annually, to review established investment guidelines and procedures and meet with the investment managers or advisors. In addition, at a minimum of every three years, the committee would conduct a competitive selection process for qualified investment managers, including any managers employed at the time who may be interested in managing the fund. The committee would recommend any changes in the investment management firm to the OPA board of directors. As for allowable investment instruments, the draft resolution says they would be subject to a “written agreement appended to these guidelines” that would be developed cooperatively by OPA and the investment managers, with approval by the board. The resolution says the agreement would “detail allowable investments and other appropriate fund governance matters.” Finally, the draft resolution says that any investment gains or losses would be credited or debited to this fund. Earlier in the year, the committee had debated an investment policy resolution that would have been much more specific as to the kinds of investments that would be permitted under a policy change. In the end, however, the committee decided not to identify specific investment vehicles in the draft resolution. Clarke told his colleagues that the list nonetheless exists and could become the list of approved investments should the revised F-01 resolution pass. The proposed list of potential investments distributed during the committee’s May 31 meeting included debt obligations of U.S. Corporations – in short, corporate bonds – as well as municipal debt obligations, otherwise known as municipal bonds. Other fixed income securities, such as U.S. Treasury bonds or obligations of other U.S. government agencies, were listed, as were a number cash equivalents ranging from U.S. treasury bills, U.S.-guaranteed agency securities, discount notes, repurchase agreements, money market funds, bankers acceptances, commercial paper, certificates of deposit and time deposits and loan participations. Certain investments were listed as non-permitted, however, including stocks, private placements, short sales, use of options or futures, margin securities, hedge funds, commodities, or any speculating on developments or trends in the market. In addition, the draft policy discussed in late May said that any fixed income securities or cash equivalents under consideration for investment, other than those backed by the U.S. government, must be rated “investment grade” by two rating agencies, Standard and Poor’s and Moody’s, at the time of purchase.

OCEAN PINES

Environmental committee targets pond-fouling geese for reduction Board considers June goose elimination effort or what OPA President Tom Terry called an ‘opportunity for adjustment’ (and probably wishes he hadn’t) By ROTA L. KNOTT Contributing Writer njoy tossing crackers to the geese at Ocean Pines ponds? You may just be fattening them up for the kill. In an effort to reduce the growing waterfowl population at the North and South gates, the Ocean Pines Association is considering allowing some of those geese to be killed and used to help feed the homeless. Bob Abele, of the OPA’s Environment and Natural Assets Advisory Committee, told the Board of Directors during its Dec. 4 work session that something needs to be done about the resident Canada goose population. He said the geese population has gotten too large and is causing damage to the ponds. “We’re not losing any resident geese,” he said. “They’re just growing and growing and growing.” Abele said “while the normal migration pattern tells us when spring is coming and when fall is coming,” Ocean Pines now has a situation where it has a “tremendous number of resident geese” that never leave the area. Those waterfowl are fouling up the area around the Worcester County Veterans Memorial, causing traffic jams and polluting the water at the ponds, he said. Excessive goose waste in the ponds was one of the reasons the OPA experienced a fish kill in the summer of 2012. Abele said the nutrients that the geese put into the pond cause vegetation and algae growth, which in turn blocks out sunlight and causes a drop in the amount of dissolved oxygen in the water. The fish then die. Abele said there are numerous methods of goose control that could be used in Ocean Pines, but the only truly effective way is to permanently eliminate the problem through a euthanasia program. Styrofoam swans are one option for scaring away geese because swans are aggressive and will chase geese. But after awhile the geese realize that the decoys are not going to charge at them, Abele said. Wires strung across the ponds are another option, but that creates a maintenance headache and would prevent fishing activity. Strobe lights and noise cannons are also used to deter geese. However, Abele said those options wouldn’t “go over too well in Ocean Pines” since residences are so close to the ponds where geese congregate. Trained dogs will chase away geese also, but “that’s an expensive proposition,” according to Abele. He said the dogs must have a master with them, come every day, and as soon as they stop coming the geese will return. “The only real way to get rid of them is to get rid of them,” Abele said of the geese. The committee recommended working with the Maryland Department of Natural Resources to have a contractor catch, kill and remove geese in order to reduce the resident population. The effort would take place in June when the only birds in the area are permanent residents, according to Abele. He said the eliminated geese are then used to feed the homeless. Abele said an elimination program will typically help to control the resident goose population for a three to five-year period. Director Marty Clarke said the OPA last participated in a similar program in 2005 to 2006, and he said it definitely worked to reduce the goose population at the ponds. “It is getting to be rather overwhelming when you see them

Frigid temperatures can make life difficult for the geese that make the South Gate area their home, but warmer weather will bring an existential challenge to Ocean Pines resident wildfowl. out there,” OPA President Tom Terry said. He said the OPA should further study the committee’s recommendation and “investigate this opportunity for adjustment” of the resident waterfowl. Realizing that the language he employed was somewhat clinical, Terry said he expected to see newspaper headlines that quoted him. According to the DNR, the Migratory Bird Treaty Act protects Canada geese, their nests and eggs. This federal law prohibits capturing or killing Canada geese outside of legal hunting seasons. However, the U.S. Fish and Wildlife Service allows property owners to conduct certain control methods with the appropriate authorization. Most permits are issued to destroy nests and to oil and addle eggs; authorization is also given to kill geese on farms or other agricultural facilities where geese damage commercial crops; and in some cases, permits may be given to landowners suffering damage. At qualifying sites, communities are issued federal permits for goose roundups; and the meat is processed and donated to food pantries. Euthanasia of Canada geese was used as a large-scale damage control measure for the first time in the U.S. in 1996. This technique involves the roundup of geese when they are undergoing their annual feather molt. The capture and destruction of geese requires a federal permit. Landowners are encouraged to hire USDA Wildlife Services or a state-licensed private nuisance animal control company to carry out this work. Capture and euthanasia operations are conducted during the summer flightless period in late June and early July.

OCEAN PINES Proposed budget From Page 1 the current fiscal year. In remarks during the Dec. 6 special meeting, Terry said it appeared as though the contract will be extended “at least for this year,” which of course assumes that the company is willing to do a one-year extension and that two parties will be able to agree on terms. Current year projections for the golf operation indicate a significant reduction in the $500,000 golf operating loss incurred last year. Thompson told the board that package play vendors have been very complimentary of the condition of the Ocean Pines golf course and that bookings of outside rounds were up this fall. The implication seemed to be that he’s willing to give BCG a full year to operate the course with no drainage reconstruction taking place that could drive golfers away. Thompson said BCG has submitted a business plan indicating more vigorous marketing efforts. He said his draft budget proposes mod-

January - Early February 2014 Ocean Pines PROGRESS est increases in golf fees next year. The general manager informed the board that the budget reflects an expansion of OPA’s racquet sport offerings. He is proposing annual fees for pickleball, an activity that has been taking place on a drop-in basis at the Community Center. His budget includes a proposal for four pickleball courts this summer at the OPA’s tennis complex off Manklin Creek Road in South Ocean Pines. He announced his intentions to hire four new employees in the Public Works department to focus on drainage issues, primarily better maintenance of the community’s roadside ditches and larger drainage ditches that are designed to move stormwater out of Ocean Pines. He said the four-person crew will be responsible for keeping ditches and culvert pipes clear of debris. In an effort to boost the OPA’s marketing and public relations staff, Thompson said his draft budget includes a new part-time employee to assist Director Teresa Travatello in

her efforts to promote Ocean Pines and communicate with the OPA membership. Despite the urging of the board in its budget guidance to the general manager, Thompson declined to propose the hiring of an assistant general manager in the draft budget. He said the position of a human resources director is included in the budget as is an information technology person. Thompson said his budget proposes increases in rates for Beach Club parking and marina boat slips, fees for which were last increased in 2010. Under an organizational change, marina employees will be reporting to Yacht Club manager Dave McLaughlin. The $130 that is embedded in the budget as a revenue source for the OPA’s Major Maintenance and Replacement Reserve – the so-called five-year funding plan – is fully funded in next year’s draft budget, consistent with the board’s earlier budget guidance. This is year six from the plan’s inception, which was created to raise cash for OPA’s capital projects. The other revenue stream into the maintenance and replacement reserve, funded depreciation, will also increase next year as a result of the new Yacht Club becoming operational. The draft budget itemizes that budgetary impact at $7 on the assessment.

Thompson has funded most if not all of the capital projects that are part of the draft Phase Two of the Capital Improvement Plan that he released in December. [The rack-and-stack associated with that plan was published in the December-Early January edition of the Progress.] The general manager said he is adding one item not included in the draft CIP – new bathroom facilities in White Horse Park to reflect the greater usage there and the fact that bathroom facilities in the Pine’eer Craft building are in poor condition. The farmer’s market that started as summertime activity is now year-round and boaters use the boat ramp located in the park. He said it’s possible he will propose to relocate the Pine’eer Craft building from its existing site between the community center and administration building into a more wooded section of the park, but he emphasized no decision has been made to do so. He later said he has absolutely no intention or desire to deprive the craft club of a clubhouse facility in White Horse Park. “They do very good things for the community and we want them to stay,” he said. But it might make more sense to provide a new building with modern conveniences, he said.

24 Ocean Pines PROGRESS

OCEAN PINES

January - Early February 2014

Proposed budget aggressively funds capital expenditures

It remains to be seen whether the Board of Directors accepts the list of proposed capital expenditures, most of which would be funded out of the OPA’s Major Maintenance and Replacement Reserve rather than through next year’s lot assessment. Only $72,300 in spending would be considered “new capital” funded from assessments, as opposed to $2,239,048 from the funded depreciation, or the so-called historical component of the

New police station, Ocean Parkway resurfacing, replacement ballfield lights, new White Horse Park boat ramp, new pickleball and platform tennis courts, new Swim and Racquet Club splash pad, bridge repairs, new White Horse Park restrooms, South Gate trail paving, Sports Core pool resurfacing and a new Community Center fitness center headline Thompson wish list for next budget year replacement reserve. Another $875,000 would come out of the so-called five-year funding plan, the second of the two replacement reserve funding streams. Ocean Parkway resurfacing estimated at a cost of $300,000 would be financed from the roads reserve, which in turn is funded from the OPA’s share of casino local impact funding. The draft budget proposes a total of $3,486,348 in capital spending for next year. Perhaps the most noteworthy of all the projects that Thompson proposes is $500,000 for a new police department

addition that would be attached to the existing police department wing in the OPA’s administration building in White Horse Park. The existing police station area would be refurbished into a meeting room. The funding source for this would be the five-year plan component of the replacement reserve. Less costly but equally noteworthy is $65,000 proposed for a new fitness center in the Community Center, funding for which also is listed under the “historical” or funded depreciation component of the replacement reserve. This might give some directors pause, as a new fit-

ness center would not normally be considered a replacement or maintenance item. Also proposed is $135,000 for new White Horse Park bathrooms, which would replace those in the Pine’eer Craft clubhouse. The general manager also is following through on a White Horse Park boat ramp at an estimated cost of $250,000, to replace the one that’s there now. Other noteworthy items in the Parks and Recreation capital budget are $150,000 for replacement lights at the Manklin Meadows ballfield and $126,000 for paving some of South Gate walking and bike trail system, much of which is prone to flooding. The Public Works Department’s proposed capital budget is noteworthy for several major items, including $175,000 in bridge work, including utility line

Proposed capital expenditure list in the OPA staff’s draft budget for Fiscal Year 2014-15. The final list will be approved when the Board of Directors adopts the budget and its February regular meeting.

By TOM STAUSS Publisher ith relatively little impact on the Ocean Pines Association lot assessment for the 2014-15 fiscal year, proposed capital expenditures in General Manager Bob Thompson’s draft budget for next year have been generously, even aggressively, funded.

OCEAN PINES

January - Early February 2014 Ocean Pines PROGRESS

Thompson proposes amenity fee hikes Golf fees, some rates for tennis, Beach Club parking passes and marina fees will be higher if Board of Directors approves By TOM STAUSS Publisher he proposed Ocean Pines Association budget for Fiscal Year 201415 projects a balance in spending and revenues of $14.279 million, a $517,621 decrease over projections for the current year. In February of last year, the Board of Directors approved a budget totaling $13.992 million, but the latest estimate is for $14.797 million in spending, reflecting the fact that more of the cost of the new Yacht Club is occurring this year than had anticipated. Spending related to operations, as opposed to capital expenditures, is on a path to beating original budget projections this year by more than $500,000. That’s according to a chart contained as part of the materials distributed with the draft FY 2015 budget book by General Manager Bob Thompson and Controller Art Carmine in early January. The proposed budget for next year represents a 3.5 percent decrease in spending over current year projected spending, but a 2.05 percent increase when compared to what the board had initially approved for the current fiscal year. In addition to a $15 increase in the lot assessment, which would rise from this year’s $914 to $929, the budget calls for increases in some but not all amenity fees. Aquatics membership fees remain as is, while golf and tennis are proposed for across the board increases. Beach Club parking and marina boat slip rental fees would all increase if the budget is approved by the Board of Directors as proposed in late February.

Capital expenditures From Page 23 replacement; $125,000 for a new dump truck and snow plough, $130,000 for two new Ocean Pines golf course fairway mowers, $58,000 for brush chipper and $32,000 for a new pick-up truck. Racquetball sports would receive $135,000 in funding for four new pickleball courts and two platform tennis courts, both paid for out of funded depreciation. Aquatics receives a lot of attention in the proposed capital budget, highlighted by $175,000 for a new splash pad at the Swim and Racquet Club, $30,000 in baby pool improvements and $45,000 in pool resurfacing and pump room improvements at that facility, and $100,000 for pool resurfacing and $50,000 for deck resurfacing at the Sports Core indoor pool. Furniture for all the pools is listed at $75,000, while $40,000 is earmarked for Beach Club restroom and related improvements.

Annual golf family rates for residents would increase from the current $2,205 to $2,300 and the individual rate would increase from $1,260 to $1,315. The resident family golf cart rate allowing unlimited cart usage would increase from $1,800 to $1,900 and the individual rate would increase from $1,200 to $1,300. The “after 12” resident rate for families would increase from $1,310 to $1,365 and for individuals from $840 to $875. The limited golf rate (30 rounds or fewer) would increase from $1,350 to $1,425 for resident individuals, including cart; there is no limited golf rate for families. Stand-alone cart and green fees would also rise under the proposed budget. Cart fees would increase from $10 to $12 for nine holes and from $20 to $22 for 18 holes. Combined in-season rates for non-member owners and guests would increase from $60 to $62 for play before noon, from $50 to $52 from noon to 3 p.m., and from $40 to $42, for 18

holes. Nine hole rates would increase $2 as well: from $35 to $37 before noon, $25 to $27 from noon to 3 p.m., and from $23 to $25 after 3 p.m. Resident tennis annual membership fees for individuals and families would not be increased, remaining at $525 for families and $315 for individuals. But the afternoon rate for resident families would increase from $130 to $160 and for individuals from $80 to $100. Platform tennis rates for increase from $115 to $150, and a new family rate, previously unavailable, would be established at $250. Also new next year would be a pickleball rate, at $150 for families and $100 for individuals. Daily rates for use of the tennis courts at Ocean Pines’ Manklin Creek Road complex would not change. Thompson said that proposed increases in golf and tennis reflected the views of member groups. Proposed aquatics rates would remain at $580 and $370 annually for

families and individuals, $315 and $190 for summer memberships, and $445 and $290 for winter-only memberships. Beach Club parking pass fees would increase under the proposed budget, from $55 to $75 for those purchasing other amenity memberships and from $160 to $175 for households up to four people buying parking passes only. Weekly rates would increase from $50 to $55. Marina boat slip renters would also be paying for the privilege of mooring their boats at the Yacht Club and Swim and Racquet club marinas. The fee for boats up to 25 feet in length would increase from $1,660 to $1,745. The rate for boats from 26 to 39 in length would increase from $2,265 to $2,380 and for boats from 40 to 44 feet in length, and live-aboards, from $3,195 to $3,355. At the Swim and Racquet Club, fees for all slips would increase from $1,200 to $1,260 and storage rates would increase from $400 to $420.

Sandpiper contract extension talks begin Lawyers exchange preliminary drafts, face-to-fact meetings imminent By TOM STAUSS Publisher iscussions between the lawyers and “operational people” working for Sandpiper Energy have begun the early stages of drafting a new contract to provide propane and natural gas services to Ocean Pines, Ocean Pines Association President Tom Terry announced recently. During the Board of Directors’ Dec. 18 monthly meeting, Terry said that initial draft language has been going “back and forth” among the lawyers, and that they would have a “face to face” meeting before the board’s next meeting in January. Terry did not offer any details or insights into the ongoing contract negotiations, but it’s been clear for some time that the OPA wants a better deal on rates for Ocean Pines customers than that which is provided for in a rate package for the entire county approved by the Maryland Public Service Commission last year. It’s not clear whether the OPA has any standing in which to negotiate a better deal for Ocean Pines ratepayers, but it won’t be for lack of trying. The directors recently hired a Salisbury-based attorney, Steven Smethurst, to represent the OPA in talks to extend the company’s existing contract to provide propane and natural gas services in Ocean Pines. In addition, the board has agreed to issue a temporary extension of the contract to April 1 of this year in order to give the parties more time to arrive at a contract that both can live with. This is the second six-month extension under the old contract.

During discussion of the Sandpiper contract at General Manager Bob Thompson’s town meeting Oct. 29, a number of details of what the OPA hopes to obtain in negotiations emerged, while other possible objectives are still under study. Thompson told property owners who assembled for the town meeting that one objective the OPA hopes to achieve is a commitment by Sandpiper to have a full-time company employee on staff in Ocean Pines to handle issues with the natural gas conversion, once it begins in earnest. There is still no indication when natural gas roll-out will begin in Ocean Pines, Thompson said. “We don’t know their conversion plans,” he said, alluding to speculation that nearby Berlin might be targeted before Ocean Pines for natural gas. Because of the blended rate structure approved for Worcester County by the Maryland Public Service Commission, neither community would benefit in lower rates from being first in the rollout. That, at least, is the common understanding that may be tested in negotiations. Thompson said that the OPA may ask that Sandpiper provide free natural gas to the Sports Core swimming pool. That idea, and others, have been suggested in emails or other communications to OPA officials in recent weeks, Thompson said, and he encouraged residents to continue to come up with ideas that the OPA could present to Sandpiper executives during contract talks. Thompson and OPA President Tom Terry confirmed that Smethurst has been asked to research whether, despite

the PSC’s approval of a rate structure for Worcester County earlier this year, it might be possible for the OPA to negotiate a rate structure for its residents that are lower than that approved by the PSC. OPA director Marty Clarke has said that he believes that the PSC approved rates represent a ceiling, and that Sandpiper could be persuaded to offer Ocean Pines residents lower rates. Chesapeake Energy Co. acquired assets of the former Eastern Shore Gas Co., in late May of last year. Following the sale, a new Chesapeake subsidiary, Sandpiper Energy, emerged to manage ESG’s former Worcester County assets, including gas lines in Ocean Pines. The board of directors in late June voted to reaffirm the extension of ESG’s contract that governs the delivery of propane and natural gas in Ocean Pines by six months. That extended contract expired Nov. 13. The new contract extension adds another five and a half months to that. Clarke, a critic of the process that led to the earlier six-month extension, told the Progress in early October that the board has not yet devised a strategy or list of objectives it hopes to obtain in exchange for granting Sandpiper the right to continue to deliver propane, and eventually natural gas, in a pipeline system built by ESG beginning about 20 years ago covering most, but not all, sections of Ocean Pines. That situation appears to have evolved, with indications that Thompson and the board are beginning to focus on how best to approach the coming talks with Sandpiper. .

26 Ocean Pines PROGRESS

January - Early February 2014

OCEAN PINES

DNR finds healthy fishing stock in South Gate pond Committee seeks stateâ&#x20AC;&#x2122;s help in eradicating phragmites By ROTA L. KNOTT Contributing Writer

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pond parallel to Route 90 at the same time last year because of the heavy weed growth preventing boat access. Abele said that pond can be surveyed in the spring when aquatic vegetation allows. The committee recommended that the OPA public works department acquire a boat, at an estimated cost of $25,000, so it can easily access and remove weeds from many of the communityâ&#x20AC;&#x2122;s ponds. There will be no charge to the OPA for the DNR to manage fish in ponds so long as the ponds are open to the public. Normal fish licenses will continue to be required of all anglers fishing at the ponds. Abele said his committee is also working with the OPAâ&#x20AC;&#x2122;s parks and recreation advisory committee to look at the health of the Bainbridge Park pond and the need for phragmites reduction, the need for shade trees and improved safety. The committee is aware that the pond is part of the overall Ocean Pines drainage system and any recommendations need to be coordinated with planned drainage changes. Phragmites control in Ocean Pines is an overall focus for the committee. Phragmites is an invasive reed that spreads and blocks out all other forms of vegetation. Abele said the reed denies the opportunity for native plant life to grow to support wildlife and wetlands habitat. All nonresidential areas in Ocean Pines have been evaluated by the committee and the Public Works department for presence of phragmites, and priorities have been established for eradication, a process that Public Works has started. At the top of the priority list is the area around the Yacht Club, which Public Works has â&#x20AC;&#x153;sprayed to the best of their ability,â&#x20AC;? Abele said. Abele said the OPA may be able to acquire a specialized chemical through DNR, at no cost to the OPA, to use in the phragmites eradication effort. He said there is a waiting list for funding for the chemical and Public Works has requested that they be placed into the queue for consideration. â&#x20AC;&#x153;DNR has to go out and get grants itself for the chemical,â&#x20AC;? Abele said, adding that sometimes funding is available to acquire the necessary chemicals through grants from agencies like the National Oceanic and Atmospheric Administration. Public Works has also applied for a higher level of certification to apply chemicals in a marine environment and plans to budget for the purchase of a $13,800 all-terrain vehicle with pumping capability to reach more remote phragmites locations.

OCEAN PINES

January - Early February 2014 Ocean Pines PROGRESS

Board ‘dives’ into 2006 controversy over Sports Core pool cover financing It turns out that the aquatics department financial statements have never included loan repayment as an operational expense, although interest payments have been. The board took action to amend a 2006 motion that in practice has never been followed. By TOM STAUSS Publisher or some Ocean Pines residents, the vote by the Board of Directors in 2006 to enclose the Sports Core pool and finance it by a $500,000 bank loan and accumulated reserves is as fresh as if it happened yesterday. It still festers, as wounds are wont to do, and only time and the inexorable thinning out of those most aggrieved is likely to make a difference. The Sports Core pool enclosure funding issue resurfaced for a brief reprise at the current board’s Dec. 18 regular monthly meeting. The board voted 5-1 to amend an Oct. 18, 2006, motion that dealt with how the Sports Core pool enclosure would be financed, more specifically who was supposed to pay for it. Then board member Ray Unger, in a move that retrospectively can be viewed as blatantly political, offered a motion that was supposed to make aquatics members in Ocean Pines pay half the cost of the pool enclosure. One half of the roughly $1 million Sports Core enclosure costs were to be allocated from the OPA’s future projects reserve, contributions to which had been made over the years by the full OPA membership base. The other half, and the one relevant to the board’s most recent action, was to come from a commercial bank loan. Debt service on the commercial bank loan, including both principal and interest, was to be paid for by aquatics members. That, at least, was the intent of the motion and the way it was commonly understood at the time. In an Aug. 3, 2006, special meeting, the board of directors had voted to pay for the pool enclosure entirely from reserves on a motion by Director Reid Sterrett. The director later explained that he had excluded borrowing in his motion as one of the financing mechanisms because he did not want to impose interest costs on the swimming membership or property owners. Over time, he said that borrowing would add more than $400,000 in interest expense to the project. Sterrett said that another theoretical reason for not borrowing the money, the possibility that interest charges could be added to the actual construction cost, thereby triggering the need for a referendum under association bylaws, was not a factor in his changed motion. “A property owner recently had raised that possibility, but we checked

with our attorney (Joe Moore), who said that interest costs would not have to be included (in tallying the costs of the project),” Sterrett said, asserting that the project did not meet the threshold requiring a referendum as spelled out in OPA by-laws. A week later, at the annual meeting of the association on Aug. 12, a majority of property owners of about 200 in attendance voted to cancel the pool enclosure contract with Structures Unlimited, the New England based company that installed the cover in 2007. The vote at the annual meeting was treated as advisory only, non-binding on the directors, on the advice of Moore. Some pool enclosure opponents had hoped for more, but Moore’s advice was consistent with advice he had given previously and since on votes taken at annual meetings. The newly reorganized board of directors, with a majority still favoring the pool enclosure project or believing it was too late to cancel the contract, took no action to stop the pool enclosure from being built. But Unger’s motion at the Oct. 18, 2006, meeting was intended to appease the opponents of the pool enclosure by supposedly requiring pool members to pay half of the construction cost along with the interest associated with the bank loan. Whether it had that result is debatable, given resentments about the enclosed pool that linger today. Even so, Unger’s motion supposedly was the controlling board action with respect to the financing mechanism. Not quite, as it turns out.

In the years that followed the completion of the project in 2007, the OPA has only partially applied the letter and spirit of the Unger motion. While interest on the loan has been treated as an operating expense, and is buried under the “other expense” line item in the monthly financial statements for the aquatics department, the principal repayment has not. Effectively that means that all property owners, not just aquatics members, have paid down the Sports Core loan principal over time. Principal is being paid down at a rate of roughly $55,000 per year. During discussion at the board’s Dec. 18 monthly meeting, former OPA Director and current Assistant Treasurer Pete Gomsak said that, under generally accepted accounting principles, or GAAP, principal repayment can’t be treated as an operating expense, only interest can be. OPA Director Bill Cordwell’s motion was intended to remove the contradiction between the OPA’s accounting practice and the letter of the 2006 Unger motion. Cordwell’s motion effectively makes it clear that only interest can be included in the aquatics financial statements and that principal repayment is an obligation of the entire OPA membership. Director Marty Clarke took exception to the Cordwell motion, asserting that the intent of the Unger motion in 2006 was to ensure that swimming members pay a portion of the construction cost through the

payment of both principal and interest. “That was the intent,” he said. “You have an accounting problem, but not an intent problem.” OPA President Tom Terry asked how it would be possible to “functionally” require aquatics members to pay down the Sports Core pool enclosure loan principal, and the answer from Gomsak was that as a practical matter it can’t be. While he said he was “sure” the intent of the 2006 board action was as Clarke said, Gomsak said the aquatics department has never come close to breaking even operationally since the pool enclosure has been in place beginning in 2007. Gomsak said that even if principal repayment had been treated as an operational expense since then, aquatics still would have lost money. each and every year. In fact, had it been treated that way in violation of GAAP, the result would have been that aquatics would have lost even more money than it did otherwise, Gomsak said. “You don’t fix the problem,” he told the board. Gomsak also said that depreciation expense related to the pool enclosure is “embedded” in the OPA assessment base and that including loan principal in the aquatics operational budget would mean that aquatics members would be “paying twice” for the pool enclosure. Terry summed up the discussion by saying that changing accounting practice to conform to the intent of the 2006 board action would violate GAAP. None of the directors, with the possible exception of Clarke, was willing to take that step. Nor was there any sentiment in favor of a more radical way of dealing with the issue, getting rid of the pool enclosure altogether. Director Terri Mohr said that would have the effect of eliminating swim lessons and a venue for swim teams over the winter months, something she clearly would not support. The Cordwell motion to bring official board policy into compliance with generally accepted accounting practice passed 5-1, with only Clarke opposed. had been posted on the OPA Web site.

Literary ladies

The Literary Ladies of Ocean Pines celebrated 2013 at a luncheon held in December at The Inn on the Ocean in Ocean City. Pictured are Sharon Armstrong, Kay Gibbons, Marlene Lombardi, Mary Jo Scarbath, Shirley Schaefer, Muriel Hinz, Marilyn Mengel, Jeanne Stielh, Diane McGraw. (Members missing from the photo: Sharon Glassman, Sally Kohler).

WORCESTER COUNTY

January - Early February 2014

Choptank Electric retirement

Long-time Choptank Electric Cooperative board of directors’ member Frank Ruffo (left) with Ocean Pines Association President Tom Terry after receiving a plaque commemorating his retirement from the Choptank board. Ruffo, a former OPA board member and superintendent of Worcester County schools, was Worcester County’s representative on the board.

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Pool enclosure vote still resonates years later Of the board that voted for the Sports Core pool enclosure, only Dan Stachurski had a front row seat for controversial decision By TOM STAUSS Publisher hen the Board of Directors at its Dec. 18 meeting reconsidered an October, 2006 board action dealing with the way the Sports Core pool enclosure is to be financed, few remembered details of the momentous

and highly politicized events that led to the opening of the indoor swimming pool the following year. Of the directors who were on the board that made the pool enclosure possible, only one, Dan Stachurski, is a current member of the board. He was absent from the meeting on Dec. 18 and so didn’t participate in the walk down memory lane that the board’s latest action evoked. While much of the board discussion involved the issue of whether aquatics members in Ocean Pines have been directly responsible for repaying a portion of the principal on the Sports Core pool enclosure loan, the directors apparently were unaware that board members in 2006 had considered another funding source for the project – sale of Ocean Pines Association-owned land on Route 589. The possibility was linked to a project then under way to build a new community center at the Sports Core parcel on Route 589. Land sales were viewed as one way possible way to finance a new community center. Director Reid Sterrett, who drafted the motion subsequently paased authorizing the pool enclosure, regarded land sales as a way of avoiding having to borrow money to pay for it. Ocean Pines Association-owned land that was considered for sale included the two-acre parcel in front of the libary and post office fronting on Route 589, as well as unimproved building lots the OPA owns throughout Ocean Pines. Permitting and cost issues and a threatened lawsuit by Pines resident Marty Clarke, currently an OPA board member, eventually killed off the Sports Core campus as a site for a new community center, but in 2006 that had not yet occurred. Sterrett noted that the board had voted to execute contracts to proceed with a new community center in the Sports Core complex, with sales of OPA land assets authorized as the financing source in the previous summer’s referendum. He said he believed there would be sufficient leftover funds from the land sales to also pay for the four-season Sports Core pool. “We’ll be able to replenish the (future projects) reserve from land sales,” he said. According to a published account, Stachurski had estimated that the sale of the Sports Core commercial property fronting on Route 589 (including the two-acre parcel in front of the library and post office) could yield $3 million or more, and that the sale of OPA-owned building lots ranging in number from 18, a conservative estimate, to 30, inq

28 Ocean Pines PROGRESS

OCEAN PINES From Page 28 cluding some less desirable lots, could yield another $3 million or more. The OPA since that time has never seriously considered selling off any of the Sports Core property, and preliminary efforts to market some OPA-owned building lots never resulted in sales. Because a large section of the property has been renamed Veterans Memorial Park, in honor of the memorial that has been erected in that area, it’s unlikely that any board would ever consider selling off that portion of the property. The two-acre parcel in front of the library and post office, however, has substsantial value, perhaps as a motel site, especially with the establishment of a casino two miles south of Ocean Pines on Route 589. Critics speculated that one reason Sterrett had changed his motion at a Aug. 3, 2006, special meeting from what had been published previously had to do with politics, specifically as a means of outflanking opponents of the project who perhaps believed it was possible to stop it by forcing a referendum, even at that late date. Sterrett told the Progress at the time that the possibility that interest charges could be added to the actual construction cost, thereby possibly triggering the need for a referendum under association bylaws, was not a factor in his changed motion. “A property owner recently had raised that possibility, but we checked with our attorney (Joe Moore), who said that interest costs would not have to be included (in tallying the costs of the project),” Sterrett said. In 2006, a referendum would have been required had the project cost been in the neighborhood of $1.2 to $1.3 million, several hundred thousand more than the actual cost of slightly less than $1 million. Had the project’s general contractor, local builder Marvin Steen, not volunteered his services for no cost to the OPA, the project’s price tag almost certainly would have exceeded the dollar amount mandating a referendum. The Aug. 3 vote authorizing the pool enclosure contracts and the funding source did not end the simmering controversy. It was a hot topic for debate at the Aug. 12, 2006, annual meeting, in which both those in favor of the pool enclosure and those opposed to it were well represented. Newly elected director Bill Zawacki, who later was to serve one year as OPA president, during the Aug. 12 annual meeting cited Sterrett’s earlier motion when he offered a motion to change board procedures in the future for dealing with amended motions. Zawacki said the change in Sterrett’s motion from the earlier version resulted in a drawdown of reserves by an additional $500,000 over what the previously published motion called for. Zawacki offered a motion that would have allowed changes in a motion on the day of a vote, while requiring an

acknowledgment and an explanation for the change from the previously published text. Zawacki’s proposal was tabled, effectively killing it until at least the next annual meeting. But opponents were not deterred. They cited the additional drawdown in reserves in support of another motion offered during the meeting, this one to cancel the pool enclosure project altogether, The debate leading up to the debate was colorful. One proponent of canceling the project said that a Sports Core pool enclosure would be “a hot house” and would prove to be unpopular. In fact, the enclosure has a retractable roof and sliding side doors that open it to the elements for summer use. While it can be a tad uncomfortable at times, it’s usually cooler than outside temperatures. The prediction on the pool’s popularity was somewhat prescient, as usage in the early years was not great. Usage has picked up considerably since those early years, but it’s fair to say that crowding has not been a problem as it is at some indoor pools, such as the Mid-Delmarva YMCA in Salisbury. The motion to cancel the project passed, 83-75, over the protests of some property owners, including Dave Blazer, president of the Hammerheads swim team, and members of the Swimmin’ Women, an exercise group that has used the pool since it reopened as an indoor facility in 2007. Moore, citing past opinions he has issued on the effect of motions during annual meetings of the association, had said he previously determined that such motions were advisory but that he would need to do new research before issuing a new opinion to the board. But following the meeting, he advised directors in less tentative terms that he believed the motion canceling the pool enclosure was advisory, suggesting that his research would not yield a new result over what he had issued years ago. “It will not stand,” then OPA president Glenn Duffy said after the meeting of the motion to cancel the pool enclosure. That view was echoed by Sterrett, who said that a slim majority of property owners numbering less than 200 voting at an annual meeting should not be able to overrule the will of the majority of property owners as expressed by the board of directors. “We represent all 8,400 or so lots in Ocean Pines,” he said. “We are elected to make these kinds of decisions.” Duffy said that if property owners voting at an annual meeting could overrule the directors, there would be no need for a board of directors. Blazer, during discussion of the motion to cancel the project, said that if it were true that a small number of property owners could set association policy by majority vote during an annual meeting, there would be nothing to prevent him from gathering “100 of my environmentalist friends” to stack the meeting q

Memory lane

January - Early February 2014 Ocean Pines PROGRESS

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OCEAN PINES

January - Early February 2014

By ROTA L. KNOTT Contributing Writer

ozens of new trees could be planted at the Swim and Racquet Club in Ocean Pines, if the Maryland Coastal Bays Program is able to secure grant funding for the initiative, which received the endorsement of the Ocean Pines Association Board of Directors during the Dec. 18 regular monthly meeting. Bob Abele and Ken Wolf, members of the OPA’s Environment and Natural Assets Committee, outlined the MCBP’s proposal to seek funding for the project through the Chesapeake Bay Foundation, which provides small grants for such environmental education projects. MCBP will use local elementary school students to do the tree planting. Wolf said last year the environment and natural assets committee adopted the Swim and Racquet Club area under the Recreation Department’s Adopt-APark Program. Since then the committee has been evaluating the property, which includes the swimming pool, tennis courts, marina, beach, parking lot lawn area, lagoon, wetlands and quasi-commercial harbor, and options for improvements to it. “We see a clear opportunity to add value for the community,” he said, adding that it can become a “more attractive, more useful and environmental

Committee, coastal bays group seek funds for tree planting at Swim and Racquet Club OPA board approves of project in concept, but Collins abstains out of concern about possible strings to grant funding gem.” Both MCBP and the Assateague Coastal Trust have surveyed the property at the committee’s request and are anxious to help spruce it up. MCBP hopes to secure the grant from the Chesapeake Bay Foundation to plant native trees and bushes in a now grassed area at no cost to the OPA. The grant would be awarded to and managed by MCBP and carried out using students to perform the actual plantings. The environment and natural assets committee along with the OPA’s Public Works Department would be involved as well in determining where and how densely the vegetation should be planted and assisting with site preparation. Director Marty Clarke made a motion, which was given a second by Director Sharyn O’Hare, that the board support and encourage the efforts of the

committee and MCBP to enhance the appearance of the park at the Swim and Racquet Club. Clarke said he hates to be asked to take action on a matter on such short notice, but given the nature of the request for the board’s support he was willing to make the motion to pursue the grant. Director Jack Collins asked if there are any “strings attached” to the grant funds. Wolf said MCBP has had several such grants in the past and would be the grantee, not the OPA. He said he doesn’t anticipate any such conditions but, if the grant comes with unacceptable conditions, the OPA would have the opportunity to pass on the project. The project requires little investment on the OPA’s part, he said, adding that public works may have to “dig some holes.” Collins wasn’t convinced and said he

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From Page 29 to convert the Ocean Pines golf course “into a nature preserve.” While a few residents appeared to endorse that suggestion, Blazer called any notion that a vote at an annual meeting would be binding on the board “concerning” and “disturbing” at various times during the debate. During the Aug. 3 special meeting, two directors, Janet Kelley and Mark Venit, had called for a delay in the vote authorizing the execution of contracts related to the pool enclosure. They were greatly outnumbered by pool enclosure proponents led by Blazer. Kelley urged a 90-day delay, “not one day more,” on a vote to authorize the execution of pool enclosure contracts. She said she needed more time to understand the finances underpinning the project and also suggested that there were other potential sources of financing for the project, including the Worcester County Board of Education. But she said she supported a pool enclosure and

would need to “look into it a little further.” He abstained from voting on the proposal. The committee is also in the process of developing recommendations for tree plantings in other public areas of Ocean Pines including at the North Gate. Locations under consideration are based on providing shade for park users, protection of water quality, prevention of erosion, screening for residents facing roads and intersections, and for general beautification. Numerous bald cypress trees have already been planted which were a gift from county resident Gene Parker through Clarke, who is the committee’s board liaison. Abele said the North Gate is a target area for tree plantings on each side of the bridge to improve the view for property owners in that area. OPA President Tom Terry asked if the committee is aware that there is an emergency helicopter landing area at the North Gate on the north side of the pond. Abele said it is, and confirmed that no trees are proposed for planting in that location. He said the committee will work with the public works department to ensure its proposed plantings are compatible with existing conditions and any plans the OPA has for use of the property. in the end abstained. Venit, who said he was one public hearing away from supporting the pool enclosure as proposed, coaxed an admission from Pete Lebel, a sales executive from Structures Unlimited, the Manchester, NH company that installed the pool enclosure, that a delay of several weeks would not result in a 22 percent increase in the company’s quote of $737,000 for its share of the project. Sterrett had cited that percentage increase in a detailed commentary about the project published in the early August 2006 edition of the Progress, using it as a reason why a decision to move ahead with the project should not be delayed. Steen, the local builder who volunteered as a no-cost general contractor to oversee the installation of the pool enclosure as well as installation of related equipment, kept to that estimate, suggesting that all project costs, including masonry work to installation of dehumidifying and heating equipment, could easily increase by 22 percent over earlier estimates.

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January - Early February 2014 Ocean Pines PROGRESS

32 Ocean Pines PROGRESS

WORCESTER COUNTY

January - Early February 2014

District 5 county commissioner race features one Democrat, two Republicans in early filing; at least one more likely District 6 commissioner Jim Bunting facing comeback bid from the former commissioner he defeated in the Republican primary four years ago BY TOM STAUSS Publisher n the aftermath of the recent announcement by District 5 County Commissioner Judy Boggs that she will not be running for reelection after 12 years on the job, the contest to replace her has become somewhat crowded. One Democrat and two Republicans have already filed to fill the seat, and there’s at least one more who has said he will run but who has yet filed the necessary paperwork with the Board of Elections in Snow Hill. District 5 is known as the Ocean Pines seat, because its boundaries lie within the Ocean Pines subdivision. District 6 includes a slice of the northern reaches of Ocean Pines but also takes in nearby River Run and Bishopville up to the Delaware state line. The District 5 slate so far includes Tom Wilson, a Democrat who is the current board chairman of Diakonia, a well-known and respected charity that provides shelter for homeless youth and families. He’s a former finance executive with the United States Peace Corps who retired to Ocean Pines about ten years ago. He’s scheduled an introductory event for his candidacy on Saturday

Chip Bertino

Grant Helvey

morning, Jan. 11, from 9:30 to 11 at the Ocean Pines Community Center. The Republicans who have filed for the Ocean Pines seat in Snow Hill include Chip Bertino, publisher of the weekly Courier newspaper since 1999, and Ray Unger, a former Ocean Pines Association director who works in security in Ocean City. A third Republican is said to have decided to run but has not yet filed. He’s Grant Helvey, the founding chairman of the Worcester County Tea Party organization that meets monthly in the Ocean Pines Community Center. He’s also the founder of stopagenda21maryland.co, an organization opposing land use policies of county, state and federal governments.

Ray Unger

Tom Wilson

Before his retirement to Ocean Pines, he had served for 24 years as power engineering manager on the Bell Atlantic regional staff, supervising 1,300 central telephone offices. In contrast to District 5, the District 6 race has generated little interest so far. The incumbent, Jim “Madison” Bunting, is an Ocean Pines property owner and a Republican. He’s a retired land planner and worked out the engineering that has improved drainage in the Section 13 area of Ocean Pines this past year, working in concert with the county and OPA. Prior to winning the District 6 seat, he served as chairman of the Worcester County Planning Commission. He

is being challenged in the Republican primary by Linda Busick, a former commissioner defeated by Bunting in the Republican primary four years ago. No Democrat had filed for the District 6 as of Jan. 7. The candidate filing deadline is Feb. 25. This year’s party primary is set for June 24, with early voting June 12 through June 19 . The general election is Nov. 4, with early voting Oct. 23 through Oct. 30. Other county positions will be contested this year, including sheriff, state’s attorney, register of wills and clerk of court. As of early January, three of the four incumbents had filed for reelection, all Republicans. Incumbent sheriff Reggie Mason and State’s Attorney Beau Oglesby are running as a team. Oglesby is an Ocean Pines resident. As of early January, Mason was the only one to have drawn competition. He will face a Republican challenger in the primary, George Truitt of Eden. Oglesby, who narrowly defeated the incumbent four years ago, had no challenger as of early January. Veteran Register of Wills Charlotte Cathell, an Ocean Pines resident, is also seeking reelection, for the first time as a Republican. The incumbent Clerk of Court, Steve Hales, is expected to run for reelection. He’s a Democrat. Seats from District 38 in the Maryland General Assembly, both the state Senate and House of Delegates, will be contested this year. The marquee race will be the one for the District 38 Senate, where the incumbent, Jim Mathias, a Democrat, Ocean City’s former mayor, is being challenged by 38B Delegate Mike McDermott of Pocomoke, a Republican. Ocean Pines voters are part of the redrawn House of Delegates District 38C, which includes northern Worcester County (but not Berlin) and Eastern Wicomico County. Democrats who have filed for the 38C seat include Mike Hindi, of Ocean Pines, and Judy Davis, of West Ocean City. On the Republican side, Mary Beth Carozza, of Ocean City, has filed. A potential candidate is Michael James, managing director of the Carousel Hotel in Ocean City and chairman of the Ocean City Economic Development Commission. James was narrowly defeated by Mathias in the Senate contest for District 38 four years ago. Because of his name recognition and the closeness of his contest with Mathias James would most likely become the presumptive favorite should he decide to file.

Jim Mathias

Mike McDermott

WORCESTER COUNTY

January - Early February 2014 Ocean Pines PROGRESS

County property values drop modestly in state reassessment

By ROTA L. KNOTT Contributing Writer

roperty owners in West Ocean City and the southern end of Worcester County are once again seeing a drop in the assessed value of their lots. While still seeing a significant decline, at 7.8 percent, Worcester County experienced significantly less of a depression in the assessed value of residential and commercial properties as part of the tri-annual reassessment by the state than that which resulted from last year’s reassessment that included Ocean Pines. That 7.8 percent decline, as compared to last year’s drop of 14.3 percent, was recorded during the 2013 property reassessment and will be phased in over the next three years. Among the 24 Maryland counties, Worcester County placed sixth with its decrease in its average annual reassessments; statewide assessments increased by an average of 4.7 percent. Garrett County had the largest drop in assessments in the state at 14 percent, while Montgomery County had an 11 percent increase in assessments, the largest in the state. The full cash value change in the assessments in Worcester County before the phase-in for the year is $2.54 billion, down from $2.75 billion as of Jan. 1, 2011, when these properties were last reassessed. Residential properties again saw the largest decline at 9.3 percent, with commercial properties falling by 1.6 percent. The full cash value of the assessments statewide is $250 billion, down from $238 billion for the year beginning Jan. 1, 2010. More than 81.7 percent of all residential properties and 70.9 percent of all commercial properties in Worcester County that were included in the 2013 reassessment decreased in value. Statewide 46.7 percent of residential properties and 42.7 percent of commercial properties included in the reassessment had declining values. Statewide, assessment notices mailed on Dec. 27 to 749,639 property owners reflect a slight increase of an average of 1.3 percent in real estate values for approximately 53 percent of the residential properties in Maryland. This group of properties was last valued in 2010. Commercial property values showed an increase in 14 of the 24 counties with an overall average increase of 16 percent statewide. In Maryland, properties are reassessed, by law, once every three years. Properties are required to be assessed at their current market value so that all property owners pay only their fair

share of local property taxes. The new assessments are based upon the examination of 51,309 sales that occurred in the reassessment area during the past three years. Any increase in property values is “phased-in” equally over the next three years. Any decrease is fully implemented in the first tax year and remains at the reduced assessment for the full three year cycle. The property assessment only partially determines the rate property owner’s tax bill. Ultimately, next July’s tax bill will be calculated with the tax rates which local governments will set in the spring. As part of the budgetary process, the property tax rates are established by the revenue requirements of each local government.

The county can offset assessment increases by lowering its tax rates to the “constant yield” tax rate level. The constant yield tax rate provides local governments with a stable level of property taxes from one year to the next. The decrease in assessments could translate into a reduction in property tax revenue to Worcester County for fiscal year 2014-15. However, if the county maintains the current property tax rate of 77 cents, despite the declining revenue, it would mean the owners of those properties that experienced a decrease in value will pay less in property taxes during the next few years. If Worcester County holds its property tax rate steady at 77 cents per $100 of assessed value, it will translate into a savings on properties where the as-

sessed value has decreased. For example, a home that had been assessed at a $200,000 value would have had a $1,540 tax bill. If the assessed value drops by $10,000 the tax bill would decrease to $1,463. Eligible residential property owners can also receive a homestead tax credit that limits the assessment to which local tax rates are applied. In Worcester County that limit is 3 percent. This taxable assessment, as reduced by the homestead credit, is listed on page 3 of the assessment notice in boxes 1, 2, and 3. This reduced taxable assessment lessens the impact of past rising property values and assessments for homeowner occupied properties that experienced assessment increases in prior years.

AROUND THE COUNTY Pines water, wastewater improvements to be bonded

Following a public hearing on Dec. 17, the Worcester County Commissioners adopted a series of proposed water and wastewater capital improvements for the Ocean Pines Service Area totaling $5.3 million. The proposed improvements include $300,000 for pump station B wet well replacement, $800,000 for the force main replacement from Station A to the treatment plant, $400,000 for pump station A rehabilitation, $300,000 for pump station E rehabilitation, $400,000 for pump station F rehabilitation, and $400,000 for reconstruction of pump stations S and P. Proposed wastewater treatment plant facility improvements include $400,000 to repair treatment unit 3

aeration system, $400,000 for a new operations center, $150,000 for repairs to the sludge greenhouse, and $50,000 for generators at stations I and G. Water system repairs include $300,000 for blue tubing replacement. Other estimated expenses include $600,000 for engineering and other soft costs and $800,000 for project contingencies. Funding for the projects is proposed to be derived from 2014 series bond funds, tagging onto the Snow Hill High School renovation and expansion project.

County recognized for financial reporting

Worcester County received an award and a Certificate of Achievement for Excellence in Financial Reporting for the fifth consecutive year from the Gov-

ernment Finance Officers. The GFOA recognizes contributions to the practice of government finance that exemplify outstanding financial management, and Worcester County was recognized for its comprehensive annual financial report for the fiscal year ending June 30, 2012. “In a constantly changing financial reporting environment, this acknowledgement from the GFOA is a testament to the ongoing efforts made by the staff and commissioners to provide consistent and transparent financial data to the public,” Phil Thompson, county finance officer, said.

School system offers photos on Shutterfly

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Residential and commercial values decline 7.8 percent county-wide, compared to last year’s 14.3 percent

34 Ocean Pines PROGRESS

WORCESTER COUNTY

January - Early February 2014

GENERAL ASSEMBLY

Legislators ready for another busy session in Annapolis Economy, taxes expected to dominate General Assembly debates By ROTA L. KNOTT Contributing Writer

ocal legislators representing District 38 in the General Assembly headed back to work in Annapolis on Jan. 7 for a 2014 session that is expected to once again include debates about economic development, taxes, the minimum wage, health care and environmental issues. During a December legislative luncheon, State Senator Jim Mathias and Delegate Mike McDermott, who has announced a 2014 bid for Mathias’ Senate seat, and Delegate Charles Otto, who currently represents Somerset and Wicomico counties, discussed issues that are likely to surface during the 2014 session. Otto’s district has been redrawn to include southern Worcester County and parts of Berlin. When discussing the business climate in the state, all three legislators said it could be better. “If Maryland businesses are not prospering all rest is moot,” McDermott said, adding that businesses in Maryland are not given the support that they need from the state in order for them to proposer. There are a number of reason, criteria why the economy in Maryland is not as good as it could be, Mathias said. He cited taxes, and quickly pointed out that he has not voted for any tax increases since he was elected to the Senate - as a significant deterrent for businesses in Maryland. He said he hopes during their legislative session that the General Assembly will discuss a corporate tax reduction that will help support growth of the economy. Additionally, he said he is among legislators who are urging Governor Martin O’Malley to streamline regulations that can hamper business development. He said “when industry looks at Maryland they look at an array of things,” including the quality of health care, condition of roads, availability of infrastructure and other quality of life factors, before deciding whether or not to locate in Maryland. McDermott said the issue is one of “what Maryland could be as opposed to what Maryland is right now.”He also cited taxes and the abundance of regulations placed on businesses as hampering business development in the state and said he has not voted for a single budget or earmark since he’s been in office, because neither businesses nor the taxpayers can afford it. Increasing the minimum wage is likely to be a big topic again during the 2014 legislative session, according to McDermott. That will have a “huge impact on business in Maryland,” he said, adding that it will hit small businesses particularly hard if they are required to pay employees more.

Otto said the plethora of regulations places on businesses “is a whole economy killer for us in this area.” He cited the phosphorus management regulations that have been placed onto poultry farmers as an example. “It doesn’t matter what you do, they just keep pushing,” he said, adding that “it’s about more control and not anything to do with the environment.” Another example is the so-called “rain tax” or new stormwater management regulations implemented by the state last session. While not currently applicable in Worcester County, he said “it’s a matter of time” before the majority tries to impose them on the Eastern Shore. All three legislators cited holding the line on taxes and dealing with a tight state budget as issues again this session. McDermott said the state is projecting a drop in revenue yet again. “We’ve going to have to find money to compensate for what we’ve already agreed to spend right now,” he said. “Maryland does not have a revenue problem; we have a spending problem. We spend more than we bring in.” He said the state has lost businesses that moved out of Maryland because of over-regulation and high taxes and is losing residents as well. “What comes as a result of losing money is more taxes spread over a wider zone,” he said.

Mathias said the state needs to support its primary industries. On the Eastern Shore, those are agriculture, tourism, small businesses and an emerging medical industry, he said. “You have to take care of what takes care of you,” he said. As for representation of Eastern Shore interests in Annapolis, Otto said the best way for legislators to do that is by communicating their concerns to friends in other parts of the state. He said building relationships with representatives from other areas is important “so they will ask us what impact” proposed regulations will have on the Shore. “You have to fight for what you believe in,” McDermott said, adding that the state is clearly divided along political party lines. He said most legislators easily agree on the non-partisan issues, but the 15 percent of partisan issues “are what turns the state.” Mathias said “it’s all about relationship building” to ensure that other legislators are willing to help address the needs of his district. He said legislators of both political parties from across the state are able to work together for the common good of residents. “We’re capable of working together and not driving each other apart,” he said. Regarding the state new health care program, Mathias said “rather than having the federal government make decisions,” the state decided to make the decisions here in Maryland. That, he said, allows local legislators to have a voice in

how the health care system is managed. The Maryland program follows closely in line with the federal Affordable Health Care Act. But the state’s Web-based health insurance market place has fared poorly since its launch late last year. McDermott called the “Obamacare” health care package “a disaster.” He said the state’s roll-out of its program does not look much different than that of the federal government. He said the state program is yet another factor that will have an impact on the health of businesses. All three legislators said local government shouldn’t count on receiving any more money from the state this year in highway user money. Last session a limited amount of funding was restored. “I’m not sure we’ll ever be back to where we were,” Mathias said, adding that the state is working to restore some of that funding to local jurisdictions. McDermott said a total of $1 billion was “siphoned out of every county in Maryland.” He agreed that most of that money will never be returned to the counties. Otto said the state is aware of the financial hardship placed on the counties when they lose that revenue stream. He said he does not think the state will ever fully restore the revenue to local jurisdictions.

AROUND THE COUNTY

bonds. Included in the capital improvement plan is replacement of the wastewater force main in the Ocean Pines Service Area. The project includes construction of a new force main along Ocean Parkway between pumping station A and the Ocean Pines wastewater treatment plant to replace an existing undersized and failing pipeline. The total project cost is estimated at $1.12 t. Engineering and design funding is included in the current fiscal year, with that portion continuing in FY15 and 16 along with land acquisition for the project. This project was recommended as a high priority in the engineering evaluation of the pump stations that was completed in 2012. Continual leaks in the existing pipeline are indicative of its age and need for replacement. Renovation and expansion or replacement of Showell Elementary School is also included in the five-year capital improvement plan at a cost of $47 million. A feasibility study of the project will be completed by the school system in April 2014. An architectural and engineering firm will access the existing building and school site and recommend a project scope of work, renovation and expansion of the current school or construction of a new

building. The commissioners approved $100,000 in FY14 to execute the feasibility study of the 37-year-old school, the first step in the project design process. Similarly, an addition to Stephen Decatur Middle School is on the capital improvement list as well, at a cost of about $8.3 million. SDMS was built in 1997 and designed with building systems to allow for a future 12- to 15-classroom addition to accommodate future population growth. The school currently uses nine portable classrooms, and enrollment is projected to continue to increase, necessitating the addition. Also, in the Ocean Pines area, the capital improvement plan calls for the acquisition and development of additional land at the Showell Park on Route 589 at $2.9 million. The county proposes to acquire 40 acres of land adjacent to the existing park and develop the site with multipurpose fields and a centralized concession stand and bathroom facility. Also, additional parking is included in the project. Expanding the park would provide for additional recreational opportunities and allow the county recreation and parks department to host

From Page 33 parents, students, and other interested parties can access the account via the Internet to view and print photographs taken at Board of Education meetings and other school functions. School system photgraphs can be accessed at https://wcpsboepics.shutterfly. com. Anyone using the site will need to set up a Shutterfly account in order to access photographs. Photo albums will only remain on the Shutterfly account called WCPS-BOEPics for a short time.

Capital plan includes $143 million in projects

The Worcester County Commissioners on Dec. 17 approved the county’s Capital improvement plan for fiscal years 2014 to 2018. Projects totaling more than $143.247 million are requested over the five-year period. Of the funding for these projects, $25.62 million or 17.89 percent is proposed to come from the general fund and $72.61 million or 69 percent from bond funds. The remainder would be covered through user fees, grants, state matches, designated funds and enterprise

January - Early February 2014 Ocean Pines PROGRESS

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January - Early February 2014 Ocean Pines PROGRESS

Pickleball moves up in Ocean Pines’ amenity world Board of Directors likely to establish annual fee as part of next year’s budget By SUSAN CANFORA Contributing Writer ickleball will become a new Ocean Pines amenity this spring, on a par with its cousins, tennis and platform tennis, and could soon be played outdoors on courts at the Ocean Pines Association’s tennis complex on Manklin Creek Road. The annual fee hasn’t yet been established, said Frank Creamer, who, with fellow long-time player Julie Woulfe, approached Pines officials and urged them to add it as an amenity. Sonya Bounds, director of recreation and parks, confirmed Monday it will happen, Creamer said. The annual fee won’t be determined by the OPA Board of Directors until the Fiscal 2015 budget is approved in February. But it’s been proposed in General Manager Bob Thompson’s draft budget and its approval by the board is virtually a foregone conclusion. Directors tend to like amenities that generate revenue for the OPA and like to promote new recreation opportunities for the OPA membership when feasible. That’s what being proposed here with the support of Ocean Pines’ racquet sport community. Perhaps more uncertain will be the fate of Thompson’s capital expenditure proposal in his budget draft for next year in support of the sport. His budget rquest is $135,000 for four pickleball courts and two new platform tennis courts. He clearly is hoping the board will approve the proposed expenditures. Now a drop-in activity at the Ocean Pines Recreation Center three times weekly, pickleball has an ever-increasing following and Creamer and Woulfe are eager to see it increase. “It is definitely growing,” Creamer said at pickleball on Sunday, Jan. 5, as bright lightweight balls, similar to whiffle balls, were served, returned and volleyed over a net by players gripping short-handled composite paddles. About 140 people are on the pickle-

Dudley Sluder

Julie Woulfe

ball e-mail list Woulfe maintains and there are about 100 regular players. On a typical Sunday afternoon, 15 or 20 are in the gym in T-shirts, shorts and athletic shoes playing doubles on two courts, punctuated with shouts of “nice serve,” “good shot” and “I can’t believe I missed that,” followed by chugs from water bottles. It’s a friendly atmosphere and refreshing example of good sportsmanship. After each game, all four players meet at the net, high five or bump fists, and say “Good game.” Creamer and Woulfe said they hope to see outdoor courts open by summer at the park. Two tennis courts could be transformed into four pickleball courts for games around the clock. The courts have lighting. Now, pickleball is played in the recreation center gym on Mondays from 2:30 to 4:30 p.m., Thursdays from 11:30 a.m. to 1:30 p.m. and Sundays from 2:30 to 5:30 p.m., for a drop-in fee of $3 per person. On Sundays, the first hour is set aside for beginners, carefully coached and encouraged by Creamer and Woulfe, who remind them a served ball must bounce once before being returned, to rush toward a serve, to get behind the ball. Then, during regular play, skilled players mix with beginners, offering tips as balls sail over the net and, sometimes, out of bounds. “We are working out what the cost will be for pickleball as an amenity, but there will be a membership to play all three -- three separate charges but

Frank Creamer housed in same complex, a racquet complex, with pickleball, platform tennis and tennis,” Creamer said. Pickleball was created almost 50 years ago, in 1965, and is a game of doubles intended for outdoors. It started on Bainbridge Island, Washington state, at Joel Pritchard’s home. He was a state representative and later elected to the House of Representatives in Washington D.C. As the story goes, Pritchard and friends Bill Bell and Barney McCallum came back from playing golf and discovered their families were bored. They tried playing badminton but couldn’t find the birdie, or shuttlecock, so used a whiffle ball. They lowered the net, went into the shed and made new paddles from plywood. The game is said to be named for the Pritchard’s dog, Pickles, whose toy whiffle ball they used. Creamer and Woulfe will teach two clinic sessions in February and March. Session I classes will be Feb. 2, 9, 16 and 23 and Session II classes will be March 2, 9, 16 and 23. The cost is $15 per session and students must be 12 or older. In Ocean Pines’ Activity Guide, pick-

leball is described as a game “in which the rules and regulations combine elements from tennis, badminton and ping pong.” “The game is played with a whiffle ball and wooden paddles on a surface half the size of a tennis court with a net lowered to 34 inches. The whiffle ball travels at about one-third the speed of a tennis ball,” it states. At the clinics, players will be given hand-outs so they can evaluate their progress from level 1.0 to level 5.0. At the 1.0 level, a player would have only minimal knowledge of the game. At 3.0, he would have consistent serves, improved shot strokes and placement and begin to attempt lobs and dinks. At 5.0, he would have mastered all skills, have accurate shot placement, hit winning shots, force opponents to make errors, master strategies and demonstrate athletic ability. Creamer, who plays other racquet sports, has been playing pickleball about two and one-half years. Woulfe started around the same time. “It is similar to racquetball,” Woulfe said. Creamer described it as “like playing ping pong standing on top of the table.” “It’s great for older people who might have aching knees and can’t run on a tennis court. You get a good workout,” Woulfe said. “It’s a game of finesses, placement. And it’s social during the time on the bleachers between games. You’ve got to come and give it a try. We want to see it grow,” Creamer said. And it certainly has, with about 60 percent of players from the Pines, and 40 percent traveling south from Delaware to use the recreation center and compete with skilled players. The only equipment required is a racquet, costing $50-$60, balls and good athletic shoes. Equipment is available at www.pickleballcentral.com. Ocean Pines pickleball players were invited by tennis players to participate in the Pink Ribbon Charity last June, with fellow tennis and platform tennis players. The three sports, combined, raised about $1,900 for the American Cancer Society, with pickleball raising $600. On the court on Sunday, Jan. 5, was Dudley Sluder of Roxana, pickleball ambassador for the Delmarva shore, from Pocomoke City north to Lewes. “My job is to promote the good will of pickleball,” he said, offering to take calls from anybody interested at 302-3219311. “Pocomoke just started it at the YMCA down there and it’s at the Salisbury Y, too. Older racquetball players and older tennis players who can’t cover the court like they used to fall nicely into the pickleball court, which is 44 by 20 feet,” said, pausing to call “nice shot” to a young player learning the game “It’s a little slower than tennis, slower than racquet ball,” he said. “It’s a great game.”

38 Ocean Pines PROGRESS

OPINION

January - Early February 2014

COMMENTARY No assessment increase needed in next year’s budget

hile the proposed assessment increase in General Manager Bob Thompson’s draft budget for next year is a modest $15, a quick and dirty analysis of the numbers he presented in a special meeting of the Board of Directors in early December yields this conclusion: Avoiding an assessment increase would be very simple in the current budget cycle and lowering it some would be just as easy. Reining in the lot assessment is doable without cutting back on what is an aggressive plan for capital expenditures in the proposed budget. Most of that proposed spending, which in turn simply is addressing maintenance and replacement needs that in most cases are long overdue, would be funded out of reserves and wouldn’t directly affect this year’s lot assessment in any case. First, the general manager and his team deserve to be commended for proposing, on the operational side of the ledger, a budget that actually burdens the lot assessment less next year than it does this year. The $8 decrease in net operations proposed in the budget – still subject to change, of course – suggests that that the general manager believes he is capable of restraining the cost of running the association. Now it’s always possible that the Budget and Finance Advisory Committee, tasked with reviewing the proposed budget and sending recommendations to the board of directors, will dive into the budgetary weeds and discover that Thompson’s draft is based- on too many rosy scenarios. Early in the budget cycle, the committee asked to be included in drafting amenity revenue projections alongside staff. The board juggled that hot potato for a few months and in the end watered down the committee’s request so that the general manager was able to deflect it, or more accurately, rebuff it. But that doesn’t mean the committee won’t take advantage of the opportunity afforded by regular order to dissect the draft’s budget’s revenue assumptions – or slice and dice them, as the case may be. One area that no doubt will receive more than the usual dissection is the proposed $97,823 loss in food and beverage operations at the new Yacht Club. Aside from its mysterious (if not comic) precision, this budgetary forecast raises the problematic conclusion that even after spending $5 million or so on a new Yacht Club, the OPA membership is faced with the prospect of its new amenity yielding a negative return on investment. This is not just the polar opposite of a rosy scenario: It’s a polar vortex that ought to chill even the most determined optimists among us. If this is the best that can be done – and apparently this is what management has concluded -- then the board of directors needs to consider an alternative to in-house management. Waiting a full season to see how it all works out really is too long.We already know what management thinks it can do, and really that simply isn’t good enough. It is late in the game, granted, but not too late to send out feelers into the local business community to see if

Leasing out the first floor of the new Yacht Club to an experienced restaurateur while operating a catering operation in-house upstairs -- two kitchens make that possible -- would instantly transform management’s projected deficit into a healthy surplus there is not some experienced restaurateur willing and able to take on management of the first floor restaurant and bar operation this summer, leaving the OPA to operate a separate catering/banquet business on the second floor with the existing management. Let’s make it as easy as possible for an experienced restaurateur to lease the downstairs: For the first year, and maybe in years two and three, the OPA would charge no rent, in exchange for being relieved of utility expense. Whoever leases the first floor of a brand new building will have an incentive and golden opportunity to turn it into a success story. Perhaps Billy Casper Golf, which has an established national track record of operating restaurants at breakeven or better, would be willing to step in at this relatively late date to lease the lower level for a $1 a year, assuming all the risk and the potential rewards in doing so. It appears that Thompson and the board is leaning in the direction of negotiating a new contract with BCG to manage the Ocean Pines golf courese and Country Club for another year, at least. Since the company apparently is going to be around anyway, why not give its regional management an opportunity to step in and lease the Yacht Club? Under this scenario, what the draft budget forecasts as an operating loss for the Yacht Club would instantly turn profitable. That would be a historic first in Ocean Pines, and any board of directors that pulls it off would earn the lasting gratitude of property owners, provided, of course, that it’s accompanied by a Yacht Club food and beverage operation that is first class in every way it can be. Based on early revenue projections of $300,000 for already booked weddings and such, the OPA’s catering operation is almost guaranteed to generate a surplus, so a break-even operation downstairs would guarantee a surplus over all. The decision to go with two kitchens in the new Yacht Club makes this scenario not only doable but almost no-brainer obvious. Is our Board of Directors bold enough to take this step in light of management’s proposed deficit for next year? Probably not without a lot of encouragement from the membership, so property owners who agree with this alternative need to make their voices heard. This is the time to do it, as the budget review process is beginning in earnest. Directors and management have email addresses and phone numbers published on the OPA Web site, so have at it, but don’t wait too long. Rubber stamps already are being brought out of storage for their annual workouts.

A break-even operation at the Yacht Club would reduce the need to raise the lot assessment by about $11.50. Should the catering operation yield a surplus in the amount that the draft budget forecasts a loss, then doubling that $11.50 turns into a $23 net impact on the lot assessment. It would turn Thompson’s proposed $15 assessment increase into an $8 decrease. Not a huge decrease, of course, but at least it reverses the momentum of recent years. Thompson is also proposing a $25 coupon incentive to encourage OPA members in good standing to visit the Yacht Club, and it’s a sound idea except in one detail: It comes attached to a $10 increase in the lot assessment, which is giving on the one hand and taking it away with the other. The $10 impact on the assessment is at best a guess; it could just as easily be $10 or $5 or $1.25. The coupon incentive might even have a net positive effect on the assessment, if it works better than management is willing to forecast. If the downstairs is leased out to Billy Casper or some other experienced restaurateur, there of course would be no need for an OPA-financed coupon program and no $10 impact on the lot assessment. The $8 decrease in the assessment becomes an $18 decrease. Who could argue with that? – Tom Stauss

The Ocean Pines Progress, a journal of news and commentary, is published monthly throughout the year. It is circulated in Ocean Pines, Berlin, Ocean City, and Captain’s Cove, Va. Letters and other submissions should be sent via email only. We do not accept faxes or other submissions that require retyping. Letters should be original and exclusive to the Progress. Include phone number for verification. 127 Nottingham Lane, Ocean Pines, MD. 21811

PUBLISHER/EDITOR Tom Stauss tstauss1@mchsi.com 410-641-6029

ADVERTISING Tom Stauss

ART DIRECTOR Rota Knott

CONTRIBUTING WRITERS Rota Knott Susan Canfora

PROOFREADING Joanne Williams

January - Early February 2014 Ocean Pines PROGRESS

OPINION

OPA collecting too much for future capital expenditures Five-year funding plan has achieved its intended purpose: Now it can be curtailed at no risk to OPA’s financial health

hen the Budget and Finance Advisory Committee and Board of Directors take a hard look at the reserve summary proposed for the Fiscal 2014-15 Ocean Pines Association budget, both groups should be able to discern that the OPA is literally swimming in cash, courtesy of Ocean Pines property owners and their annual lot assessments. Projected over ten years, the roughly $2.7 million allocated to the OPA’s major maintenance and replacement reserve next year turns into a gusher of revenue. Do the math: It’s $27 million that the OPA will be hard pressed to spend over that ten years, even if every idea to cross the general manager’s mind on how to spend megabucks – think aquatics centers or new administration buildings or a new Country Club or maybe a new Beach Club – somehow becomes reality. This is not intended to insult the GM: His job is to think outside the box and propose what he thinks is necessary for Ocean Pines’ future. Let him do so. But it’s the board’s job ultimately to decide what is truly necessary, and it’s hard to imagine that future boards will spend anywhere close to what the OPA is on a path to collecting over the next ten years. Next year’s projected $2.7 million in collections for the OPA’s major mainte-

LIFE IN THE LIFE INPINES THE PINES

“generally accepted accounting principle” can be discovered in the archives to An excursion through the curious cul-de-sacs justify it? An excursion through theby-ways curious and by-ways and cul-de-sacs In addition, sources say that one comof Worcester County’s County’s most densely community. of Worcester mostpopulated densely populated community. ponent of this reserve fund will be payBy TOM STAUSS/ By TOM Publisher STAUSS/Publisher ing in-house interest to the other, which is accounting practice turned into a caricature of itself. Will this silliness be The $16.8 million in the “rack-and-stack” that’s part allowed to happen? Sure, as no one really cares about a few dollars, here and of the proposed Capital Improvement Plan includes there, that show up on the books and the $3 million for a new aquatics center that has financial reports that most don’t bother to read, let alone try to understand. And no constituency and simply will not and cannot its architect is very persuasive and dehappen anytime in the next ten years. termined: What director would be willing to challenge him? nance and replacement reserve is com- before the five-year funding plan has The real point to be made, however, fully generated the funds needed to pay prised of roughly $1.1 million attributis the $27 million that absent board corable to the five-year funding plan – soon for the new building. Funded depreciarective action will be collected over the to be in its sixth year, with a $130 im- tion is the way the OPA is supposed to next ten years is substantially higher The Ocean Pines Progress, a journal of generate revenue to pay for a new Yacht pact on the lot assessment – and anothnews say, and40commentary, is published years from now, along with than can be reasonably spent on capital er $1.6 million in funded depreciation, Club, monthly throughout the year. from It is tiny projects over that same period. lots of other capital projects, which is somewhat misleadingly called Exhibit A in support of that conto big ticket. circulated in Ocean Pines, Berlin, West the “historical” funding stream in the So even OPA mem- clusion is the general manager’s draft Ocean City,before Snow the Hill, current Ocean City and OPA’ monthly reserve summary. There’s bership for the new Yacht Club Capital Improvement Plan, colloquialCapain’s pays Cove,Va. not much that’s historical about the theother current five-year funding ly known as the rack-and-stack, which Letters and editorial submissions: $200 or so in assessment dollars that through plan – it’s supposed to be fully funded projects $16.8 million in major capital will be collected by the OPA to fund dePlease submit via email only. We do not 2019faxes or thereabouts werequire are being expenditures over ten years. It was repreciation expense in next year’s budget. by accept or submissions–that leased by the general manager this past taxed to Letters pay forshould the next generation’s Both funding streams are more or retyping. be original and December and published in the DecemYacht Club 40 years from now. less on auto-pilot, if the board budget exclusive to the Progress. Include phone The joy of funded depreciation along ber-Early January Progress. The details recent guidance to the general managwith the five-year funding plan is that make for interesting reading; the math er is to be taken at face value. The new we get to pay for two Yacht Clubs at more so. Yacht Club comes with a net $7 increase The $16.8 million includes $3 mil127time. Nottingham Does thisLane, strike anyone in depreciation expense next year, even the same lion for a new aquatics center that has Ocean ridiculous, Pines, MDeven if some else as patently no constituency and simply will not and cannot happen anytime in the next ten PUBLISHER/EDITOR PUBLISHER/EDITOR years. Tom TomStauss Stauss The OPA’s aquatics advisory comtstauss1@mchsi.com mittee has opined that, should it ever tstauss1@mchsi.com deserving eradication? The gain any traction in the distant future, a $1,326.76 on the Hilton Hotel for the a problem 410-641-6029 410-641-6029 Advertising are by far in greater new aquatics center should be financed training of new board members, when it migratory geese Advertising would have cost nothing to have held the number, and unless you eradicate them, through voluntary fund-raising, in much sessions in Ocean Pines. the quality of DIRECTOR water in the South Gate the way that Atlantic General Hospital ART DIRECTOR Where else in our nation can a GM pond willART be not significantly improved. was financed years ago. Rota Knott I grantHugh you there are a few in the violate his spending authorization limit So subtracting $3 million from the Dougherty and instead of being reprimanded, is Pines who would rather watch the rack-and-stack leaves $13.8 million to CONTRIBUTING given higher spending limits so as not to machinations of the board than watch play with. Even assuming that everyWRITERS watching the thing in the list gets funded over the CONTRIBUTING force the board to do due diligence before geese. I, for one, preferWRITER Rota IKnott Knott spending our assessments. geese year round. am in awe, and have next ten years, in the amounts estimatReister of Ginny well-being, knowing that I ed, $13.8 million is still roughly one half I am outraged that the new Yacht a sense Inkwellmedia@comcast.net with such Club now costs $400,000 more because share the planet 443-880-1348 a creature. of what the OPA is projected to collect no one had the time to find out if other They bring joy to those who watch them, over that same period. restaurants have had problems using old whereas watching board of directors’ This is overkill. It’s immoral to collect equipment in new facilities. I can’t help meetings only brings consternation and money from property owners, many of but feel it might have been intentional, acid indigestion. whom are living on fixed or more or less Just for the novelty of it, I believe fixed incomes, that far exceed realistic as a way of keeping the projected cost down. The board just could not be the board should try to control the GM, capital needs of the association over the bothered with asking the right people who needs to be reined in before he next ten years. Moreover, having that the right questions. Then again how can starts another failed business venture much cash sloshing about and inflating we expect the right questions to be asked by turning the Assateague room in the the balance sheet represents an invitabefore the board votes on expenditures, community center into a physical fitness tion to find innovative ways to spend the when some directors don’t bother to read club. money, or, more precisely, to waste it. Again I digress. How about letting contracts they’re asked to ratify? The $130 related to the five-year Even a simple-minded goose would the geese live and letting the board funding plan in the draft budget for next think twice about putting something in machinate on something else, given year is due for adjustment. its beak before it swallows. their record track record with decisionIf not in next year’s guet now under I digress. The point is just how many of making? review by the board of directors, then Roland Langevin the 8,000-plus residents of Ocean Pines when? Ocean Pines think that geese staying year-round is It’s never too early to start aligning assessments with actual needs.

LETTER

Save the geese

Take a deep plunge into Ocean Pines politics and you can’t help but come away smelling malodorous. After years of the Ocean Pines Board of Directors being unable and unwilling to establish if the general manager or the board should be running the community, at last the board has found something it can control. It appears that the mere presence of geese is an offense deserving of the death penalty. I grant you the geese are not as colorful as the board of directors and may offend the sensibilities of those who are in a hurry and feel they deserve to hit a few geese in order to save five minutes in their precious day. But the geese are not retaliatory. I can assure you there is no secret plot to eradicate motorists or the board of directors. These geese collectively are only thinking of where they can find enough food to survive, whereas the board has such heady decisions to make that, if Tammany Hall politicians were still around, they would blush with envy. Decisions like giving the general manager a $5000 bonus for a failed performance record, or spending

40 Ocean Pines PROGRESS

January - Early February 2014

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