After Much Discussion, Council Formalizes Capital Project Plan

OCEAN CITY — The Mayor and Council this week formalized the capital improvement plan (CIP) and approved a plan to fund projects not included on the critical list in the future.

Last month, the Mayor and Council narrowed the list of projects deemed critical in the proposed capital improvement plan based on their own rankings and the rankings of the staff. Each year, the town creates a capital improvement plan including projects large and small for funding consideration in the coming fiscal years and in out years.

Those projects are ranked as either critical, very important, important, less important or for future consideration. The projects deemed critical are just that, projects that need immediate attention and must be funded for public safety reasons, repair failing critical public infrastructure or, in some cases, because the project is already in progress.

The projects in the CIP under the very important list often tip-toe the line between being critical or not, and the projects in that category are most often the ones with the greatest disparity in the rankings. Projects in the other categories are largely considered “nice to haves,” and are included in the CIP for future consideration, or when projects ahead of them on the list are completed.

On Monday, the Mayor and Council approved the proposed CIP, formalizing the planning document. City Engineer Terry McGean, who spearheads the CIP process each year, said the final document reflects the Mayor and Council and staff rankings with a few tweaks and changes from when the original document was proposed.

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“Per the council’s direction, project rankings were based on the staff rankings, with the exception of Baltimore Avenue, which was elevated to critical, and the sports complex, which was elevated to very important,” he said. “Somerset Street was accelerated to occur in fiscal year 2022 using OCDC funding. In addition, the downtown recreation complex phasing and funding was modified to accelerate the east park renovations and reflect feedback from state agencies regarding grant opportunities and timing.”

During last month’s discussion, the council approved a short list of critical projects for fiscal year 2022 with a price tag of around $1.5 million. Those projects include continued street paving, replacing a section of bulkhead at Chicago Avenue, upgrading the communication system at the Public Safety Building, repairing the elevator at fire department headquarters, continued storm-drain cleaning and replacing the gym floor and soccer field lights at Northside Park.

One major project left off the critical list in advance of last month’s meeting was a major renovation of the Baltimore Avenue corridor from North Division Street to 15th Street, including the undergrounding of utilities, the widening of sidewalks, repaving and some streetscaping. It’s perhaps the largest project in terms of investment in the CIP with a price tag that could reach $20 million. As such, it will likely be largely funded with a future bond sale and paid for over several years.

When the rankings first came out, Baltimore Avenue was on the very important list, largely because of the extensive design and engineering work required. However, at the council’s request, Baltimore Avenue was moved onto the critical list in the final CIP.

Like many jurisdictions, Ocean City is anticipating an influx of COVID-related federal grant money for infrastructure projects. Mayor Rick Meehan asked if including Baltimore Avenue on the critical list in the CIP could result in the approval of federal relief funds to expedite the project.

“Are projects such as Baltimore Avenue eligible for federal relief funds? he asked. “It is better to show that with funding identified or without an identified funding source?”

McGean said Baltimore Avenue’s mere inclusion as a critical project in the CIP could help the town secure federal relief funding.

“The most important thing is it in the document,” he said. “It shows that it is in our plan and that it is a priority for the Mayor and Council.”

Meehan said it was critical to show Baltimore Avenue remains a top priority for the town.

“I think it’s important to show it is in the plan and we’re ready to move forward with it,” he said.

McGean said he will soon be able to present some preliminary cost estimates for the Baltimore Avenue renovation project after consulting with the utility companies about undergrounding, which will make up the lion’s share of the project, and with the State Highway Administration (SHA) about the costs of repaving and expanding sidewalks. McGean said the Mayor and Council might be taken aback somewhat with the initial estimates, but advised the estimates were just that, initial.

“You may get a little sticker-shocked, but it’s going to be the worst-case scenario,” he said. “We’re still working with State Highway on much red tape there will be.”

Another project in the CIP that warranted some discussion on Monday was the renovation of the downtown recreation complex between 3rd and 4th Streets. The plan calls for a complete overall of the existing parks that straddle St. Louis Avenue. The project will be done in phases as funding and grants become available.

The initial plan was to start with the wide open west side of the park along the bayside, but in recent discussions, some city officials expressed a desire to include the east section of the park in the first phase. McGean said based on the desire of the majority of the council, renovations to the east section could be moved up in the CIP.

However, Councilman John Gehrig said he wasn’t sure a decision had yet been made about the phasing of the project.

“I thought we were still debating the phasing for the downtown recreation complex,” he said. “The west side of the park is that money-maker. That’s the star of this project.”

McGean said the east side was included as phase one in the CIP, but it was merely a place-holder and the exact phasing of the project can be debated further down the road.

“We can continue to discuss the phasing,” he said. “What I heard from you is a desire to accelerate some of those things on the east side.”

Many of the projects in the CIP are pay-as-you-go projects paid for through general fund contributions, while other large projects are bonded and paid for over time. As part of the CIP presentation on Monday, McGean and Budget Manager Jennie Knapp pitched the idea of creating a capital reserve fund, which would, as the name suggests, create a slush fund of sorts for capital projects that need to be moved up the list, or emergency, unforeseen repairs with big price tags.

“The second piece of this is the process for pay-as-you-go projects,” he said. “I’ve heard complaints before about surprises coming up. This could alleviate some of that.”

McGean and Knapp proposed a one-time installment of seed money in the capital reserve fund, followed by yearly contributions from the general fund.

“We thought about expanding that process,” he said. “We’re proposing a capital project reserve fund. It would be a $3 million initial investment and $1.5 million would be added each year. It would cover unbudgeted emergency projects and repairs. We would maintain a $1 million balance at the end of each fiscal year.”

The Mayor and Council embraced the concept and ultimately voted to approve it.

“I think it’s a great idea,” said Council President Tony DeLuca. “I love reserve funds.”

McGean said the capital reserve fund could be used to finance projects that don’t quite make the critical list in the CIP in a given year.

“We know we want to do the critical projects,” he said. “This might allow us to do some of the very important projects as well.”

About The Author: Shawn Soper

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Shawn Soper has been with The Dispatch since 2000. He began as a staff writer covering various local government beats and general stories. His current positions include managing editor and sports editor. Growing up in Baltimore before moving to Ocean City full time three decades ago, Soper graduated from Loch Raven High School in 1981 and from Towson University in 1985 with degrees in mass communications with a journalism concentration and history.