Board, GM discuss financials, potential impact of COVID-19

(June 4, 2020) Ocean Pines officials on Wednesday delivered some good financial news on the close of the last fiscal year, while also sounding a note of caution about the likely impact of COVID-19 on the coming year. 

First, General Manager John Viola, during his monthly report to the Board, said two major projects had finished below budgeted projections.

He said the new Golf Clubhouse, budgeted for $1.6 million, had come in at a final cost of $1,483,562, while the Golf cart barn also finished at a savings, budgeted for $430,000 but costing $312,121.

“This will be the last time I report the clubhouse and the cart barn — both are completed,” Viola said. 

He added two other projects, expansion of the Police station and related renovations to the administration building, remained within budget. 

“All indications right now is we’re on track,” he said. 

Less certain was the final cost of Northstar financial software implementation, which is still ongoing, Viola said. 

“We’ve extended it to December 2020. The budget was $400,000 … right now we’re at $437,000,” he said, adding the spend for Northstar, the company, was below previous estimates, but consultant fees have “come in over budget.”

Viola said operations at the Golf Club, reopened under certain restrictions because of COVID-19 on May 9, were going well.

“It’s been very positive. We’re probably doing about 60% business,” Viola said, adding some golfers were turned away because current restrictions limit guests to one person per cart, unless they live in the same household. 

“Everything is going well … it does show that you can open under these restrictions, but I have to say it did take a lot of manpower and having the golf pro there for seven days a week,” Viola said.

Overall for the month, Viola said the Association finished about $94,000 below budget, largely because of lost revenues related to the pandemic. 

“I’ve said this many times: there’s no playbook and there are a lot of unanticipated challenges,” he said. 

Viola added that the April financial report was likely to be made public by the end of the week. 

In brighter news, Viola said the fiscal 2019/2020 year-end estimate shows the Association well ahead, by more than $570,000. He said Recreation and Parks, General Maintenance, Public Works, Beach Parking, the Beach Club, Marinas and the Yacht Club all finished well ahead of budget. The Yacht Club, in particular, finished more than $200,000 ahead, despite budget estimates showing a $100,000 loss.

“Good job there, as well as everybody else,” Viola said. 

Treasurer Larry Perrone, later during the meeting, added a note of caution about the likely affect of COVID-19 on the 2020/2021 budget. 

“As the chief financial officer, I want to make sure everybody understands what we’re talking about dollar wise and the impact on the assessments,” he said. “What I need to make sure everybody understands now, and the community understands … [is that] we believe overall, our operational loss this year could be in the $1.5 to $2 million area.

“We don’t know for sure, but we certainly know it’s going to be a large number,” Perrone added. He also said the potential impact on assessments — at worst — could top $200.

Association President Doug Parks then tried to reassure Ocean Pines homeowners. He said Perrone was offering a worst-case scenario, and that any deficit incurred would likely not have to be repaid all at once.

“I just want to make sure that everybody [understands] … those are projections,” Parks said. “We’ve had a deficit before — and we didn’t make it up in a single year.

“I think the numbers are good, but those numbers … are outliers,” he continued. “It’s important to know the numbers. It’s important to know the projections. It’s important to know what kind of parameters we’re using as we go through our decision-making process. They’re not final numbers, but I think it’s good so the public understands we’ve vetted this. We’ve gone through it. 

“We’re in uncharted waters right now, so we’re doing our best to make sure that we cover all our bases and we get as much information as possible,” Parks said. 

He said everyone was doing their part — from Director Camilla Rogers researching legal opinions, to financial and operational data supplied by Viola and Perrone, and the oversight provided by the Board.

“Combined, we’re in a pretty good position — given these circumstances. Are we going to lose money? Are we going to come in on the red in our budget next year? Yes we will — plain and simple,” Parks said. “Rather than worry about it, our best approach is to manage it … and understand that we have to put our best effort forward to make sure that we do whatever possible … to try to minimize those intended losses.

“I just want to make sure that those listening … don’t take those numbers and run away scared. Take those numbers as saying, ‘Here are the parameters that we’re looking at and the kinds of things we have to think through when we arrive at a decision,’” he added. 

To view a video of the meeting, visit https://youtu.be/zulxbp1wp1U.