(Feb. 25, 2016) Thanks to a last-minute budget compromise, homeowners in Ocean Pines will not see their assessments increase this year.
During a meeting in the administration building last Friday, the directors voted 6-1 to trim an unspecified amount of money collected for legacy reserves in order to offset an expected rise in dues. The basic annual assessment was expected to go up about $20, but, because of the vote, will now remain at $921.
The board met to iron out several details of the fiscal year 2017 budget, when Director Dave Stevens introduced a plan to reduce legacy reserves, formerly called the “five-year funding plan,” by $50 per property.
For several years, the association has annually collected $130 for legacy reserves from each homeowner. The exact use of that money, as well as the lifespan of the funding plan, has been a controversial topic.
Director Tom Terry said legacy reserves allow the board to borrow money from itself, at no interest, and pay itself back over time, putting just over $1 million into reserves each year. He used the yacht club as a recent example, although he admitted that, politically, the issue has been a difficult one.
“Ultimately, it would have been a whole lot easier in the Ocean Pines arena that we live in if we had borrowed the money,” he said. “Then we would have had a real loan and a real debt … that we would have had to pay off, and it would have cost us about $60,000 per million to build the [yacht club].”
He argued that the yacht club payment plan was spelled out in a referendum passed by homeowners several years ago, and that Ocean Pines was still required to pay down a portion of that $5 million cost.
“We told folks how we were going to do it. All I’m suggesting is, we need to stay [with] what we said we were going to do,” he said.
“I think you’re not being honest,” Stevens said, calling Terry “disingenuous.”
“I totally reject the argument about the yacht club,” he said. “I don’t think anybody even understood it at the time we said it, and I certainly don’t think they understand it now.”
Stevens said the board voted last year to spend reserve funds on several new projects that were not spelled out when the plan was created, and proposed what he called a “modest” reduction in the amount collected, followed by an evaluation next year.
“Stop funding something when you don’t know how you’re going to spend the money,” he said. “I believe we should slow down the rate at which we’re collecting it and give the people in Ocean Pines a break.”
General Manager Bob Thompson disagreed.
“We know we have items that still need to be paid [for], the yacht club being one of them,” he said. “There is no mixed message in that. It’s a fact … you may not like it, and that’s fine, but you can’t rewrite history.”
He went on to say he and the directors were still in the process of going over the first draft of a study on reserves, released in January.
“We’ve got two compelling reasons to leave it alone this year,” Thompson said. “Why would we change direction before we’ve had time to validate that study? From a business standpoint, that doesn’t make sense.”
By reducing the fund, Director Cheryl Jacobs said the association was effectively “pushing [several issues] down the road.”
Earlier during the meeting, the board earmarked more than $100,000 to study several major capital replacement items, including a new country club and new police station. Those projects would likely cost OPA millions of dollars to fulfill.
“We’re going to have to have some money to do that, folks,” she said. “You’re saying we don’t know what [legacy reserves] are going to be spent on – we absolutely do know what it’s going to be spent on.”
Director Bill Cordwell moved that the board simply rename the fund “major projects,” and continue to collect $130 from homeowners. That motion fell, 3-4.
Terry then introduced a compromise – albeit somewhat reluctantly.
“I’m going to shoot myself and probably slit my wrists when this day is over with,” he said. “But … what if we decided that the number [collected for legacy reserves] that we established was based on the dues staying exactly where they are?
“We can argue all day as to what the number is going to be. The bottom line is we’re looking for a compromise here, which I believe is a workable compromise that gets us to next year when we have the information we need … understanding every dollar you don’t collect is a dollar you’re going to have to collect at some point in the future,” Terry continued.
Cordwell was the lone “no” vote.
The board will meet again today, Thursday, at 9 a.m. in the community center. A vote to finalize the budget is expected.
During a meeting in the administration building last Friday, the directors voted 6-1 to trim an unspecified amount of money collected for legacy reserves in order to offset an expected rise in dues. The basic annual assessment was expected to go up about $20, but, because of the vote, will now remain at $921.
The board met to iron out several details of the fiscal year 2017 budget, when Director Dave Stevens introduced a plan to reduce legacy reserves, formerly called the “five-year funding plan,” by $50 per property.
For several years, the association has annually collected $130 for legacy reserves from each homeowner. The exact use of that money, as well as the lifespan of the funding plan, has been a controversial topic.
Director Tom Terry said legacy reserves allow the board to borrow money from itself, at no interest, and pay itself back over time, putting just over $1 million into reserves each year. He used the yacht club as a recent example, although he admitted that, politically, the issue has been a difficult one.
“Ultimately, it would have been a whole lot easier in the Ocean Pines arena that we live in if we had borrowed the money,” he said. “Then we would have had a real loan and a real debt … that we would have had to pay off, and it would have cost us about $60,000 per million to build the [yacht club].”
He argued that the yacht club payment plan was spelled out in a referendum passed by homeowners several years ago, and that Ocean Pines was still required to pay down a portion of that $5 million cost.
“We told folks how we were going to do it. All I’m suggesting is, we need to stay [with] what we said we were going to do,” he said.
“I think you’re not being honest,” Stevens said, calling Terry “disingenuous.”
“I totally reject the argument about the yacht club,” he said. “I don’t think anybody even understood it at the time we said it, and I certainly don’t think they understand it now.”
Stevens said the board voted last year to spend reserve funds on several new projects that were not spelled out when the plan was created, and proposed what he called a “modest” reduction in the amount collected, followed by an evaluation next year.
“Stop funding something when you don’t know how you’re going to spend the money,” he said. “I believe we should slow down the rate at which we’re collecting it and give the people in Ocean Pines a break.”
General Manager Bob Thompson disagreed.
“We know we have items that still need to be paid [for], the yacht club being one of them,” he said. “There is no mixed message in that. It’s a fact … you may not like it, and that’s fine, but you can’t rewrite history.”
He went on to say he and the directors were still in the process of going over the first draft of a study on reserves, released in January.
“We’ve got two compelling reasons to leave it alone this year,” Thompson said. “Why would we change direction before we’ve had time to validate that study? From a business standpoint, that doesn’t make sense.”
By reducing the fund, Director Cheryl Jacobs said the association was effectively “pushing [several issues] down the road.”
Earlier during the meeting, the board earmarked more than $100,000 to study several major capital replacement items, including a new country club and new police station. Those projects would likely cost OPA millions of dollars to fulfill.
“We’re going to have to have some money to do that, folks,” she said. “You’re saying we don’t know what [legacy reserves] are going to be spent on – we absolutely do know what it’s going to be spent on.”
Director Bill Cordwell moved that the board simply rename the fund “major projects,” and continue to collect $130 from homeowners. That motion fell, 3-4.
Terry then introduced a compromise – albeit somewhat reluctantly.
“I’m going to shoot myself and probably slit my wrists when this day is over with,” he said. “But … what if we decided that the number [collected for legacy reserves] that we established was based on the dues staying exactly where they are?
“We can argue all day as to what the number is going to be. The bottom line is we’re looking for a compromise here, which I believe is a workable compromise that gets us to next year when we have the information we need … understanding every dollar you don’t collect is a dollar you’re going to have to collect at some point in the future,” Terry continued.
Cordwell was the lone “no” vote.
The board will meet again today, Thursday, at 9 a.m. in the community center. A vote to finalize the budget is expected.