OCEAN CITY — The town won a small battle this week in convincing the state of Maryland that it was in the Ocean City’s best interest to collect interest.
When the state expressed its desire to drain almost $3.4 million from a beach replenishment fund, Ocean City argued that it not only needed, but also had the right, to get more than just a proverbial “IOU” in return.
Simply put, the town and the county argued that if the state had to take money out of the beach replenishment fund to compensate for huge financial concerns at the state level, the local governments wanted to make sure that they were gaining interest on the money in the aforementioned account.
City Engineer Terry McGean said that the agreement is a “bit confusing” but said that in the end, things worked out for the town and the county, ensuring that interest will be accrued on approximately $3.4 million of funds left in the local share (town and county) of the beach replenishment fund.
“Previously, they were going to use cash from the fund to pay for the current project, then remove what was left in the fund and basically leave an IOU that they would replace the money with a future bond issue when needed,” explained McGean. “This meant that we would not have any money in the account earning interest. The new proposal basically uses bond funds to pay for the current project, moves the cash that would have paid for the project into the state General Fund, but leaves the remaining cash balance in the beach maintenance fund to earn interest.”
Mayor Rick Meehan informed the council of this new agreement on Monday night at the end of the council meeting at City Hall and said that it might not be the ideal situation, but it shouldn’t adversely affect the town or the county.
“Of course, we would prefer that the money not be touched at all, but with this decision, it will ensure that the local share will continue to earn interest,” said Meehan. “That interest adding up is vital as that fund continues to grow and in the case of last year, we didn’t have to contribute to it.”
McGean said that the state is looking to take any cash that it can to address mounting fiscal needs.
“It was going to go one way or another, so it’s basically an accounting move that has nothing to do with the planned beach replenishment project,” said McGean. “That is still going to be fully funded and done. All this means is that they are going to move cash to the state General Fund, and leave us bonds that will earn interest. The replenishment project was always going to happen.”
As for the $8.1 million beach replenishment project, McGean said that the emergency dune repair is just a mere few days until completion.
“We should have the entirety of the dune back to where it was prior to the November storm, which saw about half of the dune destroyed,” he said, “but we aren’t sure if we are going to be able to commence with the planned dredging in the spring. That may have to be pushed back until the fall.”
McGean said the Army Corps of Engineers is actively looking for ways to commence with the dredging on schedule.
Meehan said if the state would have been allowed to simply drain the account, it might have a negative effect on the project politically.
“We don’t want people to question the merits of the project because we have worked really hard over the years to convey just how vital beach replenishment is, and how valuable that project has been,” said Meehan.
In the end, both McGean and Meehan felt that the town and the county were vehement in making their point clear and pleading their case, and in doing so, things worked out.