OCEAN CITY — After the dust settled on Ocean City’s fiscal year 2015 budget, a surplus of around $2.4 million was discovered, allowing for some of the “wish list” items left out of the spending plan last year to now be tackled.
During last spring’s fiscal year 2016 budget deliberations, several critical capital projects were identified that ultimately did not make the final cut. However, Finance Administrator Martha Bennett on Tuesday told the Mayor and Council a final review of fiscal year 2015 revealed general fund revenues exceeded expenditures by roughly $2.4 million, which could be used to tackle some of the infrastructure improvements deemed critical that were left out of the fiscal year 2016 budget.
“We completed the financial report for fiscal year 2015 and we anticipated a deficit, but didn’t have one,” said Bennett on Tuesday. “What we found was a $2.4 million difference and that could allow you to go back and take a look at some of those projects again.”
Bennett said projects that were left out of the fiscal year 2016 budget that could be funded with the surplus included $1 million for street paving, which would take the city to its full amount dedicated to paving each year. In addition, another $800,000 could be used for much-needed improvements to Northside Park recreational facilities. The $800,000 investment in Northside Park would include a replacement of the gym floor and bleachers in the east gym and a replacement of the roof at the west gym.
Finally, another $250,000 of the estimated $2.4 million surplus would be dedicated to recoating the exterior of the Public Safety Building. City Engineer Terry McGean explained the expenditure could expedite the project.
“This project was planned for two phases,” he said. “If we add another $250,000 to that project, we would be able to do the whole project this year.”
Meanwhile, town officials on Tuesday also considered selling bonds to pay for two major capital projects. In July, the Mayor and Council passed a resolution to seek bids on a handful of major projects totaling around $18 million with the goal of selling bonds to pay for the projects long-term. Among the projects would be $5.2 million for a new water tower at 1st Street, $6.1 million for wastewater main replacements, another $5 million for a clarifier for the water and wastewater department and $1.2 million for an upgrade to the water and wastewater department’s electrical systems.
Ocean City Financial Advisor Sam Ketterman of Davenport & Company told town officials interest rates remained at or near historic lows and the resort’s most recent bond ratings were favorable for paying for the critical infrastructure projects long term through the bond sale. Ketterman said the interest rate market has been very favorable in recent years and the current market is expected to be around 2.9-percent to 3-percent. In addition, the resort recently scored high with the major bond rating agencies with AA ratings across the board.
“The bond rating agencies toured Ocean City and came away very impressed,” he said. “Fitch noted Ocean City has a strong financial history and manageable debt, while Standard and Poor’s called Ocean City’s debt low.”
Ketterman noted several factors for Ocean City’s high marks with the bonding agencies.
“Maryland is a high tax state and Ocean City is an infrequent issuer of bonds,” he said. “In addition, you have a rapid repayment history. When you look at all the factors, it’s a favorable time to go to the bond market to fund these projects.”
The council voted unanimously to approve using roughly $2 million from the FY 2015 surplus to fund the wish list projects and to go to the bond market for the major water and wastewater expenditures.