By TOM STAUSS/Publisher

OP plant expansion could be good for service area’s bottom line

The year-long construction of the expanded Ocean Pines wastewater treatment plant is nearly complete, within budget and with nary a sign of controversy. When it comes to managing its water and wastewater infrastructure, Worcester County does a masterful job. In the case of Ocean Pines, the Water and Wastewater Advisory Board continues to excel in its quiet work in harmony with the county’s Dept. of Public Works.

Originally, the plant expansion was designed to bring total capacity at the plant to about 2.3 million gallons per day, but, almost magically, the expanded plant as it gears up for operation appears able to handle 2.5 mgd, fulfilling an astute prediction by county commissioner Tom Cetola many months ago.

Interestingly, this additional capacity was brought about at a cost savings. The holding ponds that were re-excavated and relined as part of the plant expansion project were simply not refilled to the height specified in the original design.

It’s amazing how one foot of additional depth can produce a lot of additional holding capacity.

The expanded plant, according to advisory board chairman Dart Way, will have no problem in treating this much daily wastewater.

The Maryland Dept. of the Environment is being asked to re-rate the plant to 2.5 mgd., and there’s reason for optimism that the request will be granted, based on informal discussions with MDE officials, Way says.

The difference between the 2.3 mgd and the 2.5 mgd is the difference between the capacity needed to serve Ocean Pines at build-out and capacity that could soon will be “officially” available to accommodate additional growth or deal with failing septic systems along the perimeter of Ocean Pines.

The ability to sell this additional capacity, which is measured in about 660 equivalent dwelling units, is important because the county-managed Ocean Pines Service Area will be in a position to strategically market this additional capacity to area developers. The sale of these services can be structured in much the same way the county sold water and wastewater treatment services to the nearby Pennington Commons, now under construction on Route 589 across from the Ocean Pines South Gate.

For 91 EDUs, the service area reaped about $1.4 million from Pennington Commons, a tidy sum, in one-time water and wastewater-related contributions. Recurring user fees will begin producing cash flow to the Ocean Pines Service Area once the shopping center and adjoing residential development are completed and occupied.

Again, it was county commissioner Tom Cetola who pushed this concept many months ago, given a strong assist by the advisory board. Way and most of the advisory board are strong supporters of the concept of selling water and wastewater services outside the service area.

Just imagine what 660 EDUs could bring in for the direct financial benefit of Ocean Pines ratepayers, who pay among the highest fees in the state for its state-of-the-art sanitary system. This kind of cash infusion couldn’t be any more timely, as the service area will soon be without substantial six-figure annual income from new sewer connections as Ocean Pines build-out rapidly approaches.

Selling surplus water and wastewater service is an excellent, perhaps the only, way to mitigate increases in operating and capital expenses that can be anticipated in future years.

If one wants to pay ever higher fees for water and wastewater service in Ocean Pines, the best way to do so will be to oppose the sale of surplus capacity, thereby depriving the service area of needed revenue.

No doubt there will be some people who will oppose such sales. It wouldn’t be Ocean Pines if there was not at least some dissent. The county commissioner from Ocean Pines, Judy Boggs, who opposed the sale of surplus capacity to Pennington Commons, will be hard pressed not to endorse such sales in the future. Her reason for opposing the Pennington sales was the fact that the promised surplus capacity at the treatment plant was not yet available because the treatment plant expansion had not been completed.

Now that it is, a reason or excuse for opposing such future sales has been removed. In addition, the advisory board in general likes the concept, and if a specific proposal for marketing surplus capacity is endorsed by the county staff and advisory board, she may find it difficult to oppose a fiscally responsible way of dramatically increasing service area revenues for the direct benefit of her constituents.

Potential markets for this surplus capacity include Gum Point Road, where septic systems contribute substantial amounts of excess nutrient pollution to the bay watershed. While forcing individual property owners to connect to public water and sewer is always politically difficult, perhaps some creative ways can be found to solve this difficulty without undue financial burden on Gum Point Road residents.

As was recently proven by the commissioners’ decision not to create a new water district in West Ocean City, an onslaught of opposition by residents can make a difference on how the commissioners decide an issue.

Faced with withering criticism, including vile personal attacks, the commissioners understandably will take the path of lesser resistance.

Other areas that could be served by the Ocean Pines Service Area lie between Gum Point Road and South Ocean Pines, lands owned by local developers Marvin Steen and Jack Burbage. In the latest comprehensive plan development maps, these areas are given a “yellow” designation for residential infill adjoining an already developed community, Ocean Pines.

At least, that’s how county Planning Director Sandy Coyman explained it recently.

Arguably, this in-fill designation is even more compelling for future rezoning prospects than a designated “orange” growth area.

Developer Marvin Steen already has 60 building lots slated for annexation into Ocean Pines just south of Ocean Pines, and his company owns another 200-plus acres that could be served by surplus capacity.

He has made it known that he stands ready to negotiate with the OPA to join the rest of his acreage to Ocean Pines.

The possible benefits to the OPA and the Ocean Pines Service Area seem almost boundless.

All of this will make for some interesting opportunities in the months and years ahead.

Heather cooks up some golf deficit recipes

Ocean Pines Association director Heather Cook attended a meeting earlier in the month with colleague Mark Venit, OPA General Manager Dave Ferguson and the Golf Governors to discuss a fiscal drag on the OPA, continuing losses in the golf operation that seem to be getting worse, not better.

Cook offered a provocative idea for reducing or even eliminating golf deficits – shifting some golf operating expenses into the capital expense category. One example she cites is the ongoing reconstruction of the course irrigation/drainage system, which she suggests might more accurately be regarded as a capital expense.

This isn’t boring bean counting. It matters. As a golf operating expense, it’s a cost that is supposed to be fully paid for by golf members. If it were shifted to a capital expense item, all property owners would then ordinarily pay it for, indirectly from reserves or directly through the lot assessment.

In the not too distant past, but perhaps beyond the institutional memory of the OPA, a board of directors consciously decided to reallocate to golf operations some golf capital expenses that previously had been borne by all property owners. Non-golfers were prone to comment disparagingly of capital expense items that they felt they were being unfairly asked to subsidize. Directors agreed, and it’s more or less been policy ever since.

The idea is simple. Those who use and primarily benefit from an amenity should pay for it, both operating expenses and capital expenses attributed to its maintenance. Non-golfers should not be asked to subsidize the recreation of golfers.

It’s an idea that made sense then, and makes just as much sense now, notwithstanding the fact that golf operations could lose about $150,000 in the current fiscal year.

If Cook or other directors want to more accurately differentiate capital from normal operating expenses, then simply create a new line item for long term golf capital expenses. They might find that this is the way it’s accounted for already, more or less. Maybe it can be made more explicit. That wouldn’t be a problem, so long as it doesn’t mutate into an expense borne by everyone, as opposed to the direct beneficiaries.

The point is, golfers should continue to pay for golf course improvements, those that recur annually as well longer-term projects. If it’s golf related, golfers should pay for it.

The perverse reality, of course, is that continuing golf deficits mean that non-golfers are subsidizing golf operations and long-term projects in any case. At least the policy objective is to break even and to avoid foisting golf expenses on non-golfers.

The Cook recipe, in contrast, would seem to be a deliberate attempt to foist these expenses on non-golfers, an altogether different matter.

It’s difficult to imagine a majority of directors embracing this particular version of creative accounting in an attempt to make golf ops look better than they actually are.

It’s possible Cook will reconsider this idea before taking it much further.

A couple of other Cook ideas seem far more meritorious.

In a recent interview with the Progress, she revealed several ideas she plans to suggest during upcoming budget deliberations.

One idea is to eliminate the so-called premier, top tier golf membership with its preferred morning tee times and other dubious benefits, in favor of retaining the lower cost basic membership, together with the afternoon and weekend options. She wasn’t quite sure where the fee would be set, but presumably it would settle somewhere between the current premier and basic rates.

And then, in addition, she is proposing that everyone with morning tee times be required to pay a riding cart fee, something she says is a common practice among most area golf courses.

That’s an idea that has been suggested in previous years, with a board majority opting not to risk the wrath of golfers who like to walk, which after all is the way the sport was originally designed.

(Here’s an idea: Let anyone walk who wants to, but assess the cart fee anyway as an add-on fee for prime time play. Conscientious objectors can be assigned a tee time in the afternoon. Nobody is forcing anyone to play in the morning.)
With this year’s golf deficit worse than the previous year’s, she believes mandatory morning carts is an idea whose time has come.

As for eliminating the premier golf membership, its effect on revenues would be a best guess. Some weekend and afternoon members may decide to upgrade, while former premier members would be contributing less in member dues than they are currently. Former basic members could be paying somewhat more in fees, so this whole scenario could very well turn out to be revenue neutral.

But mandatory morning cart rentals could generate a substantial amount of revenue, perhaps enough to fill a large part of that $150,000 hole.

Some golfers might depart to greener pastures.

Director Dan Stachurski recently suggested another way to help bolster revenue this coming year. He may be proposing a reduction in morning tee times allocated to certain golf organizations, currently monopolizing the course three mornings a week, with the idea of making some of these slots available for lucrative non-member play, perhaps with the aid of shotgun starts from all eighteen holes.

In recent years, outside play has been pretty much restricted to the shoulder months of fall and early spring, a severe and unnecessary limitation that has contributed to outside play revenue consistently falling short of projections.

Try more vigorous marketing of morning tee times during the prime summer months, both package play and direct marketing to the retail golfer, and this dismal result could be reversed. Cook’s mandatory morning cart idea is consistent with this, as morning tee times might open up when a few disgruntled walkers opt for the afternoon or other area golf courses, the few that allow walk-on play in the morning.

Should the OPA be able to successfully market outside play during the summer months, it would be restoring the status quo ante of more than ten years ago, when outside play was eliminated, in a fit of board and golf governor hubris stemming from very large golf surpluses that had been accumulating during the early years of Ocean Pines. The directors, aided and abetted by the golf governors of earlier vintage, in a single year managed to fix what wasn’t broke by killing off the golden goose of outside play.

Once lost, it’s been proven difficult to restore.

Sporadic, half-hearted and half-baked efforts to bring it back haven’t succeeded because the effort has been targeted to package play during the shoulder months, when bad weather plays havoc with the best-laid budgets.

Cook said she may be proposing something similar to Stachurski’s idea, possibly suggesting the elimination of organizational play on Fridays, to enable three-day golf packages to be marketed to outsiders.

Dave Ferguson, the OPA general manager, may also have some sensible ideas for reversing golf deficits in next year’s draft budget package that will be introduced for board and public scrutiny in January. He warned the board during last year’s budget process about the dangers of tweaking the golf membership structure, and his predictions about reduced revenues were right on target. Directors ignore his counsel at their peril.