PPP forgiveness puts OPA $1.275 million ahead of budget as year closes

By Greg Ellison

(June 24, 2021) Ocean Pines got good news last week, when the association was informed that the $1.14 million it received last year in federal Payroll Protection Program money would not have to be repaid.

With the elimination of the Small Business Administration loan from the debt side of the ledger, the association’s unaudited fiscal year 2-20/21 figures are closing ahead of budget by $1.275 million.

General Manager John Viola told the board of directors last Wednesday that the SBA sent a letter of forgiveness days earlier.

“The PPP has been forgiven,” he said.

Word had been awaited since the association filed its loan-forgiveness paperwork in mid-March, with the SBA given a 90-day response window.

Viola said Bank of Ocean City officials confirmed the PPP status by phone last week, with Director of Finance Steve Phillips receiving official correspondence just days before the board meeting.

Director Doug Parks, noting the association had been working under the assumption PPP funds would not be repaid, asked how confirming that fact might impact auditing FY20/21 numbers.

“It would be revenue [but] it would be a loan that’s forgiven,” he said.

Viola said the operating income would be offset by salary costs.

“If it hadn’t been forgiven, we would have had to change the statements,” he said.

Association President Larry Perrone asked if the budget surplus would be carried over to current fiscal year ledgers.

“If we do nothing, from an accounting standpoint, that money, those earnings, rolls over into retained earnings,” he said.

Surplus from the past fiscal year would, among other points, serve to zero out $165,000 remaining from prior operating deficits.

“It goes into the same account and would turn that positive,” he said.

Perrone said despite some financial unknowns, one bright spot is guaranteed.

“The good news is the deficit we’ve been operating under the last few years is now done,” he said.

Viola said regardless of positive budget variances recorded for FY20/21, all PPP funds were used for payroll.

“We adhered to that 100 percent,” he said. “We do have a surplus, but the surplus was also because we cut costs.”

Cutbacks in amenity offerings also contributed to the budget excess.

“We couldn’t do certain things because of covid,” he said.

Viola attributed the strong financial footing to operational issues, while noting PPP funds were deployed exactly as outlined by the SBA.

“If we didn’t it wouldn’t have been forgiven,” he said.

The positive financial trend was tempered a bit during April with ending monthly figures reflecting revenues ahead of budget by $148,000, but expenses coming in at $202,000 over projections, to close $54,000 under estimates.

Losses for April included golf operations at roughly $48,000.

Viola said $40,000 for chemicals and turf maintenance originally budgeted for May was pushed forward on the advice of course Superintendent Justin Hartshorne.

Hartshorne said soil temperatures affected application timing.

“We had it budgeted in May but ended up seeing the weather favorable in April,” he said. “That’s not a window that you want to miss.”

Viola also highlighted general maintenance ending April about $35,000 under projections.

“We did a lot of deferred maintenance that hadn’t been done in a while at the Racquet Sports Center,” he said.

Looking at year-to-date numbers through April, which closes FY20/21, unaudited figures reflect revenues over budget by $370,000 and expenses under by $905,000 for a positive variance of $1.275 million.

In addition to PPP funding, the association also was awarded $125,000 from the CARES Act, with food contractor the Matt Ortt Companies receiving about $275,000 in covid-19 relief, which Viola said rounds out to about $1.5 million.

“If we didn’t receive any of the $1.5 million … we would have lost $250,000,” he said.

Providing a sneak peek on the current fiscal year, Viola said monthly budget numbers for this May should be favorable.

“We had record-breaking applications, or payments, for memberships across the board,” he said. “We’re trending higher than two years ago, but some of it’s timing that they’re just coming in early.”

In addition to the uptick in participation at the golf course, racquet sports center and pool facilities, the Matt Ortt Companies reported about $500,000 in recent banquet bookings.