(Feb. 2, 2017) Exactly how much Ocean Pines should fund its reserves is a debate as old as time – or, at least for about as long as the 49-year-old community has been in existence.
For the next fiscal year, however, not much is projected to change in terms of overall reserve levels — a major dip in the projected bulkhead reserve levels necessitated by a series of emergency repairs notwithstanding.
In a budget draft document prepared by interim General Manager Brett Hill, the overall reserve balance as of May 1 would decrease about 5 percent by April 30, 2018, to $4.684 million.
A year and a half ago the previous board, and the previous general manager, spent $31,000 on a Design Management Associates reserves study, which many of the directors never bought into.
Other long term planning documents fell similarly by the wayside during that period.
Board President Tom Herrick said during a budget meeting on Friday the board had discussed “the DMA study being so inaccurate,” and said staff was working on an upgrade.
“Without knowing what we need right now or what we may need, because we don’t have accurate information, I don’t think it’s fair to the membership to fluctuate the assessments,” he said.
Because the reserve level would not change drastically in the budget draft, the basic assessment would remain as it was during the previous fiscal year, at $921.
Director Pat Supik, former chair of the budget and finance committee and now board treasurer, said a certain of amount of common sense should be used when budgeting for reserves.
She said assets in Ocean Pines, at cost, totaled $45 million. Accumulated depreciation totaled $22 million.
“That means that, all things being equal, we should have $22 million in our reserves right now to replace the assets,” she said. “Nobody is suggesting we’re going to get to $22 million, but I think on the other side of that to have $4 million to replace greater than $22 million … I just don’t think that is [enough].”
“It’s our obligation to ensure the financial stability of Ocean Pines – that’s one of our foremost obligations,” Supik added. “We should have $22 million at a minimum – and we have $4 [million].”
Board Vice President Dave Stevens said he completely disagreed with that line of thinking.
“We are not grossly unstable right now,” he said. “Actually, we are becoming more and more comfortable.
“This year we had a peculiar year … in that we spent a whole lot more than we had planned to, for very good reason,” Stevens added. “We’re way ahead of the game in terms of the country club, for example.”
The board approved about $425,000 for improvements at the club this fiscal year and have earmarked another $417,000 for renovations during the next fiscal year.
Other facilities addressed by the board in either the current or next fiscal year include the community center, administration building, beach club, sports core pool and yacht club. Several new playgrounds and racquet sports courts have also been discussed and are considerations in the new budget.
“We’ve already whizzed by most of the big items. I’m not saying there aren’t more in the future, but if you look tell me what they are,” Stevens said. “What’s the next big thing that we’re going to do after 2018?”
According to Hill, many of the renovations would deal with the interior part of Ocean Pines facilities. Eventually, the exteriors would also need work. The administration building, for instance, apparently has squirrels living in the roof.
“You have all these other components. We’re not touching windows. We’re not touching HVAC. We’re doing an in-place upgrade of certain walls out of a building that is on our books for millions,” Hill said. “To say that we’re done with the building and that’s there’s else that’s going to be left [to do] – that’s pretty far from accurate.”
Ditto the country club, Hill said.
“There are still key components to the building that are left undone that we know on a 40-year-old building are going to hit us,” Hill said. “We’re doing the cheap inside renovations right now.”
Director Cheryl Jacobs added that work to improve drainage at the golf course – a multi-year, multi-million-dollar project – was only about half done, and Hill said the swim and racquet club, Mumford’s Landing pool building and sports core pool building bathrooms all needed to be addressed, eventually.
Still, Stevens said there was no way to know how much the association would need to set aside, and he said there were other factors involved before adequate reserve levels could be determined.
“It’s not as simple as looking at depreciation or numbers, though. It’s making decisions about what we’re going to use those buildings for – how we’re going to use them,” he said. “That takes the board to sit down and make policy level decisions about it.”
Stevens, with support from the board, agreed to work on a new capital improvement plan. He said he would use previous studies and speak with Facilities Manager Jerry Aveta, as a starting point.
Hill said Ocean Pines staff had already spent hundreds of hours on updating the reserve study. Elsewhere, the comprehensive planning advisory committee continues to work toward a new comprehensive plan.
With all of those circumstances in flux, the directors consented to leave reserves levels in place, according to the Hill budget draft.
The next budget discussion is scheduled for Monday, Feb. 6 at 9:30 p.m. in the boardroom inside the administration building on 239 Ocean Parkway.
For the next fiscal year, however, not much is projected to change in terms of overall reserve levels — a major dip in the projected bulkhead reserve levels necessitated by a series of emergency repairs notwithstanding.
In a budget draft document prepared by interim General Manager Brett Hill, the overall reserve balance as of May 1 would decrease about 5 percent by April 30, 2018, to $4.684 million.
A year and a half ago the previous board, and the previous general manager, spent $31,000 on a Design Management Associates reserves study, which many of the directors never bought into.
Other long term planning documents fell similarly by the wayside during that period.
Board President Tom Herrick said during a budget meeting on Friday the board had discussed “the DMA study being so inaccurate,” and said staff was working on an upgrade.
“Without knowing what we need right now or what we may need, because we don’t have accurate information, I don’t think it’s fair to the membership to fluctuate the assessments,” he said.
Because the reserve level would not change drastically in the budget draft, the basic assessment would remain as it was during the previous fiscal year, at $921.
Director Pat Supik, former chair of the budget and finance committee and now board treasurer, said a certain of amount of common sense should be used when budgeting for reserves.
She said assets in Ocean Pines, at cost, totaled $45 million. Accumulated depreciation totaled $22 million.
“That means that, all things being equal, we should have $22 million in our reserves right now to replace the assets,” she said. “Nobody is suggesting we’re going to get to $22 million, but I think on the other side of that to have $4 million to replace greater than $22 million … I just don’t think that is [enough].”
“It’s our obligation to ensure the financial stability of Ocean Pines – that’s one of our foremost obligations,” Supik added. “We should have $22 million at a minimum – and we have $4 [million].”
Board Vice President Dave Stevens said he completely disagreed with that line of thinking.
“We are not grossly unstable right now,” he said. “Actually, we are becoming more and more comfortable.
“This year we had a peculiar year … in that we spent a whole lot more than we had planned to, for very good reason,” Stevens added. “We’re way ahead of the game in terms of the country club, for example.”
The board approved about $425,000 for improvements at the club this fiscal year and have earmarked another $417,000 for renovations during the next fiscal year.
Other facilities addressed by the board in either the current or next fiscal year include the community center, administration building, beach club, sports core pool and yacht club. Several new playgrounds and racquet sports courts have also been discussed and are considerations in the new budget.
“We’ve already whizzed by most of the big items. I’m not saying there aren’t more in the future, but if you look tell me what they are,” Stevens said. “What’s the next big thing that we’re going to do after 2018?”
According to Hill, many of the renovations would deal with the interior part of Ocean Pines facilities. Eventually, the exteriors would also need work. The administration building, for instance, apparently has squirrels living in the roof.
“You have all these other components. We’re not touching windows. We’re not touching HVAC. We’re doing an in-place upgrade of certain walls out of a building that is on our books for millions,” Hill said. “To say that we’re done with the building and that’s there’s else that’s going to be left [to do] – that’s pretty far from accurate.”
Ditto the country club, Hill said.
“There are still key components to the building that are left undone that we know on a 40-year-old building are going to hit us,” Hill said. “We’re doing the cheap inside renovations right now.”
Director Cheryl Jacobs added that work to improve drainage at the golf course – a multi-year, multi-million-dollar project – was only about half done, and Hill said the swim and racquet club, Mumford’s Landing pool building and sports core pool building bathrooms all needed to be addressed, eventually.
Still, Stevens said there was no way to know how much the association would need to set aside, and he said there were other factors involved before adequate reserve levels could be determined.
“It’s not as simple as looking at depreciation or numbers, though. It’s making decisions about what we’re going to use those buildings for – how we’re going to use them,” he said. “That takes the board to sit down and make policy level decisions about it.”
Stevens, with support from the board, agreed to work on a new capital improvement plan. He said he would use previous studies and speak with Facilities Manager Jerry Aveta, as a starting point.
Hill said Ocean Pines staff had already spent hundreds of hours on updating the reserve study. Elsewhere, the comprehensive planning advisory committee continues to work toward a new comprehensive plan.
With all of those circumstances in flux, the directors consented to leave reserves levels in place, according to the Hill budget draft.
The next budget discussion is scheduled for Monday, Feb. 6 at 9:30 p.m. in the boardroom inside the administration building on 239 Ocean Parkway.