Bylaws and Resolutions Committee will review Perrone proposal
Ocean Pines Board members on Saturday said they liked the idea of creating a new capital funding tool, but were not ready to vote on the matter.
Director and Association Treasurer Larry Perrone introduced the new capital motion during the Aug. 31 regular Board meeting, but later agreed to withdraw it for further review.
The original motion would have directed General Manager John Viola “to establish a New Capital reserve fund to be funded as of fiscal year 2020/2021 as provided by Sect 8.03 of the Ocean Pines Association By-Laws.”
Perrone said current practice calls for funding new capital items through the operational budget, which then negatively affects the annual assessment.
According to his formal motion, “Controlling the increase in the annual assessment has and can continue to cause this and future Boards to attempt to control the assessment increases by not making necessary New Capital purchases.”
Perrone proposed to fund the account using “up to 10 percent of the yearly replacement reserves.” He said the account would not exceed $1 million and the motion would cap annual new capital spending to a maximum of $500,000.
“A reserve account dedicated to New Capital expenditures will allow for better financial planning and control without directly impacting the association yearly assessment,” Perrone said in the motion. “It will also eliminate the tendency to forego necessary New Capital projects because of the direct impact on the annual assessment.”
Several Directors agreed with the concept, but said the motion needed refinement.
Director Colette Horn said the not-to-exceed figure was too high and the total fund amount was excessive, based on the amount of new capital funds spent during previous years.
Association Vice President Steve Tuttle was in favor of a new capital funding tool, but suggested first running it by the Bylaws and Resolutions Committee. Director Camilla Rogers voiced similar concerns.
Association President Doug Parks agreed with reviewing the motion, adding community input could help determine specific new capital items to target during the next several years.
“I’d much rather have a group of folks get together [to get] input from the community,” Parks said. “If we had those kinds of things targeted, I’d feel a lot better about the concept of building this capital expense fund.
“I am not in support of the motion today, [but] I am in support of the concept and I think we have to do some homework,” he added.
Two other directors, Frank Daly and Tom Janasek, suggested tabling the motion.
“I wouldn’t support it the way it’s developed,” Janasek said. “I wouldn’t say our Board is going to use [the new capital fund] for something extravagantly stupid, but who knows that future Boards won’t want to do that.
“To me, it’s just another fund that’s just going to grow and grow,” he added.
Perrone agreed to withdraw his motion and send it to the Bylaws and Resolutions Committee for review.
“I think it’s a very good start on this, but it proves that it isn’t a simple transaction – it requires a lot of thought,” Parks said. “It requires some input and some … future proofing, so we understand how this money, if we create this fund, will be used properly.”
A 6-1 vote later defeated the only other “New Business” item on the agenda.
Tuttle proposed a motion to present “a referendum to the Ocean Pines Association membership to have a yes or no vote on whether to change the by-laws such that the allowable single capital expenditure would be reduced from 20 percent of the current income from annual charges to 12 percent of the income from annual charges.”
Although only Tuttle voted in favor of the motion, Horn thanked him for presenting it and said doing so “generated some really useful discussion.”
“It really caused us to think about all the larger issues that we need to solve … [including] trust issues and how we approach our decision making about major spends,” she said. “I want to thank you, Steve, for this motion. I think this has been a great discussion.”
To view a video of the entire meeting, visit https://youtu.be/SwMRwJmjx3w.
Links for specific agenda topics are as follows:
MOTION – Funding New Capital – Larry Perrone https://youtu.be/SwMRwJmjx3w?t=4716
MOTION – Referendum on Board Expenditure Limit – Steve Tuttle https://youtu.be/SwMRwJmjx3w?t=5821