Ocean Pines closed out fiscal 2019 on a positive note, according to General Manager John Viola’s annual financial report, given on Saturday.
Viola said the bottom line – $115,795 of excess revenues over expenses – was a “big difference from the last two years, where I stood up here and had to inform you of losses of around $350,000 and $1.4 million.”
“We’re definitely moving in the right direction,” he said.
Viola said the Ocean Pines Police and Fire/EMS departments contributed $108,604 to the positive variance. Public works was over budget by $41,643, but had to tackle several un-budgeted items at the Yacht Club, while Recreation and Parks beat budget estimates by $120,050, he added. Overall food and beverage operations beat budget estimates by about $13,000.
Viola said, “golf was basically flat,” budgeted for a $106,562 loss, but finishing with a $108,354 loss, for a negative variance of $1,792.
“Last year, as you know, the weather … did not fare well for amenities, specifically golf. And that was across the board – not just for Ocean Pines,” he said.
Viola said one particularly rainy period of three or four days cost the Golf operations about $60,000 in lost revenue.
“If we had had some favorable weather, golf … would have been within that target that I had of somewhere between [a] zero and $50,000 expense,” Viola said.
Bad timing, from an accounting standpoint, also negatively impacted golf, Viola said.
“That had an $18,000 effect on golf – that will not happen again,” Viola said. “I will call it timing and I believe we’ll get that money back.
“I’m looking, down the road, at positive signs for golf,” he continued. “The place is packed.”
Viola added he’s talked to golfers on the course and has heard “very positive” feedback.
“That’s a tribute to the entire team there – maintenance, our golf pro, and everybody else there associated with it.”
Beach Club Parking finished $51,372 ahead and the Marinas were favorable by $25,293, with Viola crediting the latter to Ron Fisher and his team. Racquet Sports were unfavorable by $15,758.
All amenities combined for a $101,723 positive variance.
Ocean Pines finished fiscal 2018 more than $1.2 million unfavorable to the budget, meaning fiscal 2019 showed an improvement of $1,363,486 year over year. A large portion of that, $752,042, was thanks to a vastly improved performance at amenities.
Viola attributed that to “the Matt Ortt factor,” referencing the Matt Ortt Companies hired last year to manage the Yacht Club and Beach Club. The Yacht Club showed a $590,282 improvement over fiscal 2018, while the Beach Club improved by $205,342. Together, those two amenities combined for an $830,863 improvement.
Viola added the Ortt Companies would next take over operations at the Tern Grille, once the new facility is built.
“I’m very excited about it and I know our golf pro is also,” he said.
Unfavorable variances in the IT, legal, and General Manager and Human Resources departments totaled $263,339.
Viola said more outside contracting services were needed in IT because the department was “putting out many fires on a daily basis.” That was also, according to Viola, “a function of the legacy [software] system we’re moving from.”
“This should, in time, go away.”
He said the legal overage was a symptom of a changing landscape in Ocean Pines.
“Whenever there’s change, well, there’s going to be cost independent of what the change is,” Viola said. “There also are situations where numerous items come up that obviously, for the best interest of Ocean Pines, we need to receive a legal opinion.”
“Severance and HR expenses” contributed to overages in the General Manager and Human Resources office, Viola said.
Assessments during the last fiscal year included a $71 per-homeowner charge to pay down the operating fund deficits from fiscal 2017 and 2018. Viola said that would be re-evaluated going forward.
“It definitely won’t be anywhere near that kind of number,” he said. “We had the losses and now we’re paying it back – but that is turning around.”
Viola said assessments over the last five years had increased an average of $15.40, or roughly 1.7 percent each year.
“The amenities [and] the departments are operating on full cylinders, so you can see which way we’re going for the future,” Viola said.
Reserve funds totaled about $8.8 million as of April 30, 2019. That balance is projected to drop to $5.2 million by the end of fiscal 2020 because of several major projects.
Renovating the Police station is expected to cost $1.3 million, the new Golf clubhouse is estimated at $1.6 million, the Golf cart barn should cost $400,000, and Northstar software implementation is anticipated to cost $300,000. Other factors included $150,000 for new playground equipment at White Horse Park and $85,000 for the new Craft Club building.
Restarted bulkhead, dredging and drainage projects – each put on hold for several years – are also expected to draw down the reserves. Viola said Operations Director Colby Phillips and her team would give a presentation on those initiatives during the next regular Board meeting, in September.
“There are many initiatives to replace much of the infrastructure of Ocean Pines. As of now, [the projects] are on budget and on track,” Viola said.
To view the full report, visit https://youtu.be/bG33ugso4eo?t=1138.
Ocean Pines’ Annual Meeting of membership was scheduled on Saturday, Aug. 10. However, because no quorum was established, no official business was conducted.