JOSH DAVIS/BAYSIDE GAZETTE
Ocean Pines General Manager John Bailey on Monday meets with the board of directors to discuss the proposed fiscal 2020 budget.

By Josh Davis, Associate Editor

(Jan. 17, 2019) A reoccurring topic of discussion emerged during the start of Ocean Pines Board budget hearings Monday, as several directors said they wanted to see five-year plans when considering how much to spend and how much to set aside for bulkhead, drainage and road repair programs.

Board members also said they were uncomfortable with some of the projections offered by General Manager John Bailey, particularly when it came to bulkheads.

According to Bailey, bulkhead reserves were estimated to begin the next fiscal year, on May 1, at $1,598,000. With an estimated fiscal 2020 contribution of $22,500 and bulkhead spending of $1.6 million, the fund is projected to close fiscal 2020 with $1,443 remaining.

“That includes another $20,000 that we did change as a result of conferring with the [budget and finance] committee – we added another $20,000 to expenditures … so that would pretty much wipe out our bulkhead reserve balance at the end of April 30, 2020,” Bailey said.

While planning to drain the reserves, Bailey also proposed waiving the $19 annual contribution paid by all association members as well as the $453 paid each year by bulkhead lot owners. That was apparently based on previous guidance by the budget and finance committee.

“Then, going into the following year, the $19 would be back in as well as the assessment for bulkhead property owners,” he said.

Bailey said a reserve study mapped out future bulkhead work at about $1.1 million per year, while the association had spent on average closer to $800,000 per year.

“That may mean a slight increase in the bulkhead assessment … but it may not,” he said.

In order to keep up with future work, Director Ted Moroney said bulkhead collections would probably need to increase $100,000 during each of the next three years “so that the amount we’re collecting each year is pretty close … to the amount we’re spending.”

“Let everybody know how that’s gonna work going forward, that way it’s no surprise and it’s phased in, and that basically this is kind of a break-even fund going forward,” he said.

Director Esther Diller, who earlier during the meeting asked for five-year plans on roads and drainage, said that was also necessary for bulkheads.

“I think the bottom line to all these sections of the budget we’re talking about is we can’t just look at this year,” she said, adding better planning would help do a better job of managing homeowner expectations.

“Nobody likes surprises,” Diller said.

Moroney agreed on the importance of a longer-term plan that looks at least “three-to-five years down the road.”

“We really need to think about the actions we’re taking now and the effect on the community in a year or 18 or 24 months,” he said.

Moroney called some of Bailey’s calculations “overly aggressive,” and said the bulkhead reserve balance probably would be closer to $400,000 by April 30, 2020, not the $1,443 Bailey was projecting.

That alarmed Diller.

“This is a huge variance to me and it’s hard for me, as a board member, to make a decision on a budget with a $400,000 swing,” she said.

Budget and Finance Committee Chairman John Viola also called Bailey’s numbers “very aggressive,” saying projected bulkhead work for the closing months of fiscal 2019 far exceeded the amount of work already done, hence the potential for a $400,000 overage.

“This is the GM, this is your budget, this is your plan and, even sitting here, I’m not completely sure that you are convinced yourself that you are going to get this work done,” he said.

“We have not seen, in the first six months, that type of execution … I’m just telling you facts,” Viola continued. “Me, just sitting here right now, I’m just trying to see if I get a comfortable answer from the person doing to the execution.”

Viola posed another question – if Bailey ends up being right, why would he suspend collections and let the reserve fund empty out?

“Going back to arguments that were made last year that we have too much money in there and we really didn’t need to collect it … there was talk of that, but I didn’t have enough information, data wise, to support recommending that,” Bailey said. “I thought taking it down to $20,000 or so, we could waive it, but now going to zero, maybe we shouldn’t.”

Viola said it seemed that Bailey was ignoring the advice of those in the room and putting some of the blame on the budget and finance committee.

“I really hope you would relook at this,” Viola said. “With this aggressive plan that I hope you achieve … maybe there should’ve been an assessment as opposed to me telling you there should be something.”

Moroney said he is “counting on [Bailey] not getting there,” otherwise he wouldn’t be in favor of waiving collections.

If Bailey ends up being right, however, that could mean raising collections for bulkhead lot owners as much as 30 percent, Moroney said.

“You’re talking about almost a $200 increase per lot owner,” he said. “That’s why this number matters, because it affects next year’s reserve contribution.”

There was also talk of whether bulkhead work in general would be drastically more expensive in the future, with some saying the cost per linear foot had risen 50 percent.

Bailey said he didn’t remember that number and, pressed for a ballpark figure, offered, “I don’t know what number to throw out.”

“Rather than throw out a ballpark, I’d rather work the number and give you the number,” he said.

Association Vice President Steve Tuttle said it felt “like there’s a whole lot of numbers spinning around.”

“I’m not comfortable waiving the fees,” Tuttle said. “That just makes me real nervous at this point.”

Director Frank Daly agreed the association was “playing with fire,” while Diller said she wanted to see real numbers – not wild estimates.

“In [Bailey’s] defense, for lack of a better word, today’s the first day we told you that we want to see a five-year plan, basically, across the board,” Diller said. “So, we’ve got to give you a little bit of breathing room to get us that plan.

“I want you to talk with your department heads and get real numbers,” she continued. “You’ve gotta start somewhere, so you start today. I don’t want to keep beating you on it. I think you get it.”