July 2016
www.issuu.com/oceanpinesprogress
443-359-7527
OPA Board Election Coverage Pages 34-40
Sports Core pool closes for summer for major upgrades
THE OCEAN PINES JOURNAL OF NEWS & COMMENTARY COVER STORY
‘Secret’ memo from Thompson to board recommends higher reserve fund levels Stevens slams report that general manager declines to release on grounds that it is a ‘working document’ integral to completion of a reserve study and a capital improvement plan. Increases in reserve funds normally suggest assessment increases By TOM STAUSS Publisher memo from General Manager Bob Thompson to the Board of Directors in June recommends funding the Ocean Pines Association’s replacement reserve fund at a significantly higher level than it stood at the end of fiscal 2015-16. Boosting the reserves to the level recommended by the general manager would require a hefty assessment increase if it were to happen all at once, but the general manager is recommending a glide path of ten years to reach the desired goal. OPA Director Dave Stevens told the Progress that Thompson is recommending that the OPA fund its Major Replacement and Maintenance Reserve at 50 percent of an arcane calculation favored by the accounting profession known as the annual component cost. That’s been estimated at $14 million in prior years, but it probably is higher now because of new, higher priced assets replacing older depreciated items since that calculation was done originally by former OPA board member Pete Gomsak, an OPA assistant treasurer. At 50 percent of $14 million or more, Thompson’s recommended minimum replacement reserve balance would come in at roughly $7 million or more, about $3 million higher than the replacement reserve balance on April 30, the end of the 2015-16 fiscal year. Boosting the replacement reserve by $3 million averages out to $300,000 in additional assessment dollars per year over ten years, or about $35 per year per property owner over that ten-year period. But that might be understating reserve requirements by a lot if the OPA decides to embark on a spending spree to replace major assets and decides to fund it the same way that it funded the $5 million Yacht Club. That funding mechanism amounted to a special assessment – funds over and above that raised through the traditional funding of depreciation of OPA assets – spread out over five years.
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The original five-year plan conceived as the way to finance the Yacht Club lives on in year seven or eight, depending on what start date is chosen, in the form of the replacement reserve’s “legacy” funding component. A solid board minority is determined to end the legacy funding component once and for all next year. Whether that happens probably will depend a great deal on who’s elected and who’s not to the board in this summer’s election. The premise of that funding meth- Bob Thompson od was to have most of the funds already in the bank to finance a major purchase, which turned out to be the new Yacht Club. OPA Treasurer Tom Terry recently alluded to the possible need for financial resources in addition to what would be necessary to fund an acceptable percentage of the annual component cost. An approved capital improvement plan – Thompson is proposing a deadline of December for board action on that – could help determine that need, Terry told the Progress in a recent telephone interview. Terry also said that the accounting profession recommends that a range of 30 to 70 percent of the annual component cost should be held in an homeowner association’s replacement reserves, with 30 percent considered the “bare minimum” and 70 a very healthy level. Without confirming that Thompson’s recommended percentage is 50 percent, Terry said that 50 percent clearly represents a middle ground between the optimal and minimal percentages. The OPA has never formally adopted the ACC model for its reserve accounting, but it appears almost as an aside in To Page 44
The Sports Core indoor swimming pool will close beginning Monday, July 11, for an expected two months to allow the Ocean Pines Association to make major improvements to the pool and decking while all of the seasonal aquatics facilities are open and available for use by property owners. ~ Page 6
Food truck purchase won’t happen this summer, GM says General Manager Bob Thompson’s proposed $55,000 food truck purchase is not going to happen this summer, a victim of a 3 to 3 tie vote in May and concern that with fewer weeks in which to operate this summer, revenue projections could not be met. The proposal may not be dead, however. It’s in the budget for this year, and Thompson may bring it for a board vote next year. ~ Page 26
Collins unhappy with Beach Club process delays Contractors must respond to a request for proposals to renovate or construct new bathrooms at the Ocean Pines Association’s Beach Club in Ocean City by July 26, but it is unlikely that staff will present a recommendation for bid award to the Board of Directors before September. That has caused some friction with Director Jack Collins, who wanted RFPs to be issued much sooner and bids submitted sooner as well, to allow the current board of directors time to review them and approve the project before a new board takes over in August. ~ Page 15
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