Major boost to bottom line would allow directors to cut property owners $71 break

By Greg Ellison

(Jan. 27, 2022) Assessments could be cut $71, from $996 a year to $925, in Fiscal Year 2022-23, according to a proposal made during an extended review of departmental budgets last Wednesday by the Ocean Pines Board of Directors.

General Manager John Viola said despite the surge in inflation, along with higher labor and material costs, the proposed operating budget would cut assessments substantially.

“We are really fortunate this year to have tailwinds,” he said.

The board review followed a multi-day vetting of the Ocean Pines Association’s financial package by the Budget and Finance Committee during the first week of January.

Viola cited improved amenity revenues and current budget favorability as key factors for offsetting increased costs on other fronts.

“Right now we’re running a nice surplus for this year,” he said.

Based on current budget performance, Viola suggested that $53 of the $71 reduction in assessments would be because of a one-time boost of $450,000 to the bottom line. Another $18 would be added to that as higher expected amenity revenues exceed increased payroll costs (roughly $267,000), additional staffing for the Ocean Pines Volunteer Fire Department and a slight rise in insurance premiums.

Looking at reserve accounts, Viola said $350,000 was earmarked for this year, with the same sum proposed for FY 22/23, to replenish road funds.

“Budget and Finance [Committee] also proposed building up road reserves,” he said.

Viola estimated that current budget favorability of about $1.1 million could be further increased by roughly $334,000 for a year-end surplus of $1.4 million.

Turning to Public Works, Viola said improving dilapidated mailbox clusters is under consideration for the next budget year.

“We asked them to focus on pedestals and … mostly maintenance,” he said.

Viola said replacing 13 concrete pads in dire need of repair could cost up to $40,000, with another $50,000 required to replace 100 pedestals at $55 each.

Viola said new cluster boxes would run about $20,000.

“It could be a big number,” he said.

Bulkhead replacement costs, which totaled $1.3 million this year, are estimated to drop to $919,000 in the new fiscal year.

“We dialed it back at least for this year.”

Director Larry Perrone asked about the status of receiving dredging permits from the U.S. Army Corps of Engineers.

Viola said in the wake of coronavirus issuance of permits slowed to a crawl.

“We just got permits from 2019, so we’ll be working on that,” he said.

Viola said dredging operations would begin in the spring.

Turning to golf operations, Finance Director Steve Phillips said the proposed budget reflects increased revenues on par with the current year.

“We’ve raised some green fees and some cart fees,” he said.

Phillips cited higher labor and fuel rates as financial challenges.

“We had really good weather this year and our financial numbers are showing that,” he said. “We didn’t miss any big weekends.”

Police Chief Leo Ehrisman noted an extra cost for body cameras beginning next budget year.

Phillips said the equipment would be deemed a capital expense because of a lease agreement.

“We don’t own the equipment,” he said. “It would not be used until January 2023.”

Ehrisman estimated costs at $30,000 annually for five years, with the potential for grants to offset the price.

“We’re budgeting right now as if we’re not getting any assistance for it,” he said.

Director of Aquatics Kathleen Cook said the amenity experienced higher revenues this year based on higher membership numbers, which added roughly $13,000  to the bottom line.

After previously proposing adding a daily-use charge for children under age 5 during the Budget and Finance Committee review, Cook amended the proposal last week.

Cook said regional market research shows that children over the age of 2 are usually charged for entertainment activities.

The revised recommendation would add a $3 daily use fee for children between ages 2-4.

Perrone, who questioned the suggestion during the Budget and Finance Committee review, again voiced displeasure.

“I think this is a bad idea,” he said.

Perrone recommended tracking usage data for the upcoming season and revisiting the issue next year.

“I think we need to raise the fees more on nonresidents as opposed to raising it on 3- and 4-year olds,” he said.

Cook said raising rates on nonresidents would be less effective, because approximately 96 percent of pool users are residents.

Bouncing over to Racquet Sports, Recreation and Parks Director Debbie Donahue said adjustments to proposed rate changes were made following the Budget and Finance review.

Director Amy Peck said the Budget and Finance Committee balked at the initial rate proposals.

“We’re lowering individual drop-in rates for tennis, while at same time increasing the price of tennis memberships,” she said.

Peck said the Budget Committee proposed a $15 charge for tennis, as opposed to the $10 suggested.

Peck also said the previously proposed $8 drop-in fees for tennis were deemed too low, with the budget committee suggesting between $10-15, while also proposing a charge from $7-8 for pickleball and platform tennis drop-in rates.

“The goal is focused on increased memberships, not just revenue,” she said.

Viola backed the idea of setting tennis drop-in rates at $10 for residents and $15 for nonresidents, with pickleball and platform tennis charges of $7 for residents and $8 for non-residents.

Marina Manager Ron Fisher said revue estimates next year were conservative because fluctuating fuel prices made forecasting these expenses almost impossible.

“Our guess is as good as yours where gas costs and oil costs are going to go,” he said.

Fisher said the marina’s cost for ethanol could hit $4 per gallon this summer.

“We filled up the tank at end of the year and we do have 18,000 gallons,” he said.

Based on guidance from the Budget Committee a 4 percent increase for boat slips was included in the FY 22/23 proposal.

Fisher said the increase would include a $2,025 fee for boats from 15-25 feet, $2,755 for boats from 26-39 feet and vessels between 40-44 feet paying $3,896.

Swim and Racquet Club slips would cost $1,460.

“As of today we have 85 boats on the waiting list and we just got two more,” he said.

Ocean Pines Fire Department President Dave VanGasbeck stressed the importance of repairs and maintenance for emergency stations.

“This past year we had mold remediation,” he said. “The south station is in poor shape and in need of renovation.”

VanGasbeck said a feasibility study for the proposed building project is nearing completion.

“We remediated the mold that was in the living quarters. However, we still have a lot of mold left,” he said.

Additionally, VanGasbeck noted that the Pines fire stations still have drainage issues.

“We had gas lines that fell out of the ceiling,” he said.

Along with $80,000 for repairs, VanGasbeck estimated $20,000 would be required to expand station living quarters.

Further, fire officials estimated $20,000 would be needed to purchase a new alerting system in the north station along with $16,000  to replace the HVAC system.

“The altering system isn’t working in a large portion of the building,” he said.

Viola said recommended budget changes would be part of a forthcoming town hall slated to review details with the community.

Ocean Pines annual budget requires final approval 45 days prior to the next fiscal year commencing on May 1.