1/21/2009
I Can't reserve my opinion on OPA reserves
Commentary by Bob Lassahn

At the December 17, 2008 meeting of the Ocean Pines Association (OPA) Board of Directors a member of the Budget and Finance Advisory Committee (B&F) made a presentation to the board on alternatives for funding capital assets. The presentation summarized the opinions of the B&F on loans vs. assessments and spoke to building up OPA's reserve accounts. During the presentation it was suggested that the OPA annual assessment should be increased by about $40 for the coming year and that amount dedicated to bolstering reserves.

The presenter, Pete Gomsak, commented on the fact that the presentation was a bit early, as a comprehensive plan for OPA facilities is not complete at present. I interpret that comment to mean there is no real world information on what actually needs to be done, the time frame involved and a solid estimate as to the cost.

Time passes and during a subsequent recommendation to the board (at an unannounced meeting) the B&F bumps the amount of the recommended assessment increase for the coming year to $105, again to begin building reserves. (By my calculations that represents a bit over $880,000 per year OPA will sock away.) Going forward the B&F then recommends annual increases solely for reserve funding (not for increased operational costs) to the level of $1,320 by 2014. Oops, wait one minute! According to Joe Reynolds of OceanPinesForum.com the B&F subsequently says it made an error in their calculations and the 2014 assessment is now only $890 (only off by $420). Does anyone else have a problem with trusting the numbers here?

Unfortunately, at least to my knowledge, there is still no information on what must be done, when it will be done and how much will be needed; otherwise known as a comprehensive plan. But there it is, another healthy chunk of change recommended to be tacked onto the current assessment for "reserves." Didn't we just do that to the tune of around $150?

I'm not against having a fund to pay for necessary repairs or upgrades to OPA facilities and I understand that there will be some issues that raise their ugly heads unexpectedly, so having a bit of a money cushion is also a good thing. One doesn't need to be an expert to see that some facilities need work. In some cases it needs to be done sooner rather than later.

However, at present I am wont to believe there is a solid basis for what the reserves need to be during any given year. A long awaited assessment on the condition of the facilities and a schedule of anticipated work hasn't been laid before the membership to show where any of these "reserves" will be headed. When asked about a comprehensive plan by a member on OceanPinesForum.com Director Marty Clarke responded, "What plan?" Based upon this I'm relatively certain it doesn't exist. I'm sorry, but without knowing the leadership has laid out how the money is actually supposed to be used, the word "reserves" just strikes me as another way of saying "cash stash."

Mr. Clarke, never one to mince words, also commented to the effect he "wouldn't trust any board with $5 million," an amount often touted as the necessary level of reserves. In his own inimitable way, my interpretation is he was lamenting the fact that access to ready cash sometimes leads to spending it on things other than what was originally intended. Sticking to a budget requires some discipline and when it seems that money is just laying around doing nothing at the moment (regardless of the fact that a new roof looms on the distant horizon) it might be a good time to spend it on something "really cool." I believe history would support the suggestion that this can happen

Considering the economy this is a really bad time to be thinking about increasing the assessment without significant justification. Responsible business people and individuals are looking at all means possible to shave a few dollars here or there to weather the current economic downturn. Instead of spending an additional $8.75 per month (the B&F pointed out to the board the $105 increase represents only that amount on a monthly basis), most individuals are working to reduce their expenditures by similar amounts in various areas. I won't get into tugging at the heart strings too heavily, but it is almost a certainty that for someone out there an additional $8.75 a month might put them on shaky ground. Businesses are failing (or asking for bailouts) and people are losing their homes at an unprecedented rate. It just isn't the right time to ask anyone to pony up more cash unless it can be demonstrated there is a very good reason.

I would be remiss not to mention that a significant amount from the annual assessment always goes to subsidizing OPA amenities such as golf and the food and beverage operations; enterprises that seem unable to avoid financial woes. Aquatics have also entered this realm of the financial drain thanks to the addition of an unscheduled indoor pool; aptly demonstrated to be incapable of supporting itself prior to approval. But that's water under the girders and fiberglass. Every penny saved via a reduction in subsidies for these operations could certainly go to reserves. Perhaps this is a goal worth pursuing with more than just lip service.

OPA, unlike many other enterprises, has the luxury of almost unfettered access to funds. Basically all it needs to do is say to the members, "give me more." That doesn't mean the management should be any less conscientious about being frugal with money the members entrust to them. The board and management should be open regarding why they need it, how they intend to spend it and should deviate from established budgets and plans only for emergency situations. To continue the mantra of my favorite "bean counter" Gene Ringsdorf, they should also be reporting this information to the members in a readily understandable format. And I'll add; even if the economy was booming these same tenets apply.

Hopefully the OPA board, in its infinite wisdom, will require the justification I speak to before seriously considering any proposed assessment increase for reserves. If it is absolutely necessary the property owners will have to bite the bullet and pay up. But if it boils down to a guess based upon yet another guess (or perhaps consulting a rune), perhaps the time isn't quite right to be sticking extra cash in the old OPA sock, "just in case."

The OPA board will hold a public hearing regarding the budget on Saturday, January 24 at 9 a.m. in the Country Club.

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