OPENPUBLICA · PUBLIC MEETING RECORD
Record of Proceedings

Ocean City Mayor and City Council Work Session - October 28, 2025

Mayor and City Council & Boards — Tuesday, October 28, 2025
BodyOcean City, Maryland
SessionMayor and City Council & Boards
DateTuesday, October 28, 2025
StatusFILED
Video Record
0:00 / 59:56

Transcript — Verbatim
0:00

You've got everybody trying to cross the Route 90 bridge.

0:04

And the line goes back.

0:06

I've seen it go back to the car wash up on seventy-fourth Street.

0:10

And if I'm sitting in in that line waiting to, and I've been there for a half hour, and I'm sitting in front of the fire station and the fire alarm goes off and the fire truck wants out.

0:22

Do I want to give up my place in line so the fire truck can get out?

0:27

Well, of course, if you're a good citizen, you'd say yes, I'll get in get out of line and go back to the beginning of the line and wait another half hour to go home.

0:39

But if I'm most people, I'd say, hey, they can wait till the traffic moves a little bit and makes room for them.

0:47

So to avoid problems with that, I think a no no stopping, no standing zone would be uh helpful.

0:56

Thank you.

0:57

Anyone else today?

1:00

All right, seeing none, we'll move on to new business.

1:03

Item A, we have an acknowledgement overstanding committee report.

1:06

We had the police commission meeting on October 15th.

1:11

Questions about that?

1:13

Seeing none, we'll move on.

1:14

Item B, we have an independent audit opinion of the fiscal year 2025 annual financial statements presented by Chris Lehman.

1:22

Welcome.

1:23

Thanks for having me.

1:29

Good afternoon, everyone.

1:31

Um I have a brief presentation that I'll share that goes over the uh results of our recent uh fiscal year 2025 financial statement audit um for the town.

1:42

So if we start on slide uh three with scope of services, probably done one.

2:10

All right, there we go.

2:11

Okay.

2:11

Um we've completed the audit of the June 30, 2025 financial statements.

2:16

In addition, because the uh town has expended more than 750,000 of federal expenditures, there's also what's termed a uniform guidance single audit that's required.

2:27

That's a uh federally mandated compliance audit.

2:30

In addition, the state of Maryland requires a uh standalone report that reports uh the revenue and expenditures related to the convention center.

2:41

The state of Maryland also requires the uniform financial report to be submitted along with the annual financial statements, and that's currently due at the end of this month.

2:52

Uh once we've finished up the single audit, there's also a data collection form that's required uh to be submitted that we will complete.

3:01

So those are the um uh deliverables that we've either completed or in the process of completing for the audit.

3:08

Next slide.

3:10

Thank you.

3:11

So we've issued a clean or unmodified opinion on the financial statements, and that says that the financial statements are reasonably free of material misstatement, and that would be the best opinion we could give under professional standards.

3:25

We discovered no fraud uh through our audit.

3:29

Our audit isn't a forensic audit, but we are required to have a healthy skepticism of fraud that it could be that it could happen at any time by anyone.

3:38

We discovered no material weaknesses in the internal controls, and I'll have a slide that highlights the significant controls that we relied on for the audit.

3:48

We've also received the full cooperation and management, so any records that we requested.

3:53

Questions that we asked, we obtain obtained uh adequate support and adequate answers to all of our questions.

4:01

We are in the process of still finishing up the single audit.

4:05

Uh we have no findings to report to date, and we're still well within the deadline for the single audit.

4:10

That's due uh March 31st of next year, so there's plenty of time, and we're well within that window.

4:17

And then lastly, we had no audit entries that we proposed, so that just uh speaks to the quality of the records that we were uh provided for audit.

4:28

This slide here just shows the key phases of the audit.

4:32

Um we have the planning phase where we meet with management prior to the audit, understand any changes or significant transactions that we need to be aware of for the audit.

4:42

Our preliminary testing, we come out and test transactions and understand processes that impact the financial statements, and our final field work phase, we come after management has closed the books and we audit those year-end numbers, and then we review lastly the draft of the report, and we issue our opinion at the conclusion of the audit.

5:04

Next slide.

5:05

And then this is uh just a different way to look at our audit process.

5:10

Really, the audits designed to be a funnel of how we filter out, really, we're filtering out financial statement risk through each process.

5:18

We're at the end of the process, we can uh give that unmodified opinion once all the financial statement risk has been addressed.

5:26

Any questions so far?

5:28

Okay.

5:30

And then on this slide here, as I alluded to about the key processes.

5:33

So first we assess the control environment, and there's five interrelated components listed here at the top, and they all really need to work together to have a strong uh control environment in place, and we have concluded that the town does have a strong uh control environment for the period under audit.

5:52

When there's not a strong control environment, typically we would have material weaknesses, audit adjustments, maybe delays in getting the audit done.

6:01

We had uh none of those matters.

6:03

And then getting into the key processes listed here, um, just to pick on a few.

6:09

If we look at treasury, we're looking at really cash and investment reconciliations to ensure those are done timely, accurately, um, you know, properly reviewed, looking at the uh disbursement cycle or the expenditures, testing uh payments to vendors to make sure those are going through the proper uh you know, procurement and approval approval channels, payroll looking at times, authorization of those timesheets, making sure employees are paid at the same rate or uh correct rates are just some examples of uh what we're auditing uh through those key processes, and there's additional points listed here for those other areas.

6:53

Next can you go to the next slide?

6:55

One more slide.

6:56

Um I won't read through each one of these points.

Discussion Breakdown — Share of Meeting
Engineering And Infrastructure█████████████████████████████████████████████51%
Fiscal Sustainability█████████████████████24%
Internal Audit██████████████16%
Traffic Management████5%
Parks and Recreation████4%
Summary of Proceedings

Ocean City Mayor and City Council Work Session - October 28, 2025

The Ocean City Mayor and City Council held a work session on Tuesday, October 28, 2025, beginning at 1:00 PM. The agenda included a closed session from 12:00 to 1:00 PM, public comments, and several new business items: acknowledgement of the Police Commission report, presentation of the independent auditor opinion for FY2025, annual comprehensive financial report, State Highway Administration fall update, and two contract approvals for fire hydrant assessments and softball field lighting.

Public Comments & Testimony

  • Anonymous Resident: Commented on traffic congestion on the Route 90 bridge, noting that long lines make it difficult for emergency vehicles to pass. The speaker requested a "no stopping, no standing zone" near the fire station to improve emergency access.

Discussion Items

A. Police Commission Report Acknowledgement

  • The council acknowledged the Police Commission meeting held on October 15, 2025, with no questions.

B. Independent Auditor Opinion (FY2025)

  • Chris Lehman of SB & Company, LLC presented the audit results. The firm issued an unmodified (clean) opinion on the June 30, 2025 financial statements, indicating they are free of material misstatement. No fraud was discovered, no material weaknesses in internal controls were found, and no audit entries were proposed. The audit included a single audit due to federal expenditures over $750,000, with no findings to date. The town's control environment was assessed as strong. Council members expressed thanks to the finance team for their excellent work.

C. Annual Comprehensive Financial Report (FY2025)

  • Finance Director Chuck Bireley and Assistant Finance Director Shawn Bunting presented highlights:
    • Town-wide net position increased by over $12 million in FY2025.
    • Total revenue increased over 3% from the prior year, expenses increased by just over 5%.
    • Governmental activities revenue increased $6 million; property taxes increased nearly $5 million despite a 1-cent reduction in the real property tax rate. The assessable base rose by $1.2 billion due to state reassessment.
    • Operating grants increased over $1 million (including $900,000 for ambulance services), rental license revenue up $260,000.
    • Governmental expenses increased $5.6 million, including $800,000 more in advertising (tied to room tax revenue growth) and $400,000 more in legal fees for offshore wind opposition.
    • General fund: Revenue exceeded final budget by $1.5 million (including $600,000 more in room taxes, $275,000 more in tourism grants); expenditures were $2.5 million under budget (public safety $1.2M under). Fund balance increased by nearly $550,000, contrary to the projected $3.3 million decrease. Unassigned reserves exceeded three months of expenditures (policy requires at least 17%, or ~2 months).
    • Water and wastewater funds each saw over $2 million increases in net position.
    • Transportation fund net position decreased $1.3 million due to an $800,000 drop in tram revenue.
    • Convention center net position increased over $900,000.
    • Golf course profitable for the fifth consecutive year, requiring no general fund subsidy.
    • Pension plans: Both plans had investment returns over 12%. General employees plan funded ratio increased from 83% to over 88%; public safety plan from 82% to over 86%. Combined net pension liability decreased by over $8 million. The town contributed less ($300k and $630k reductions) yet liabilities fell due to investment gains.
    • Other post-employment benefits (OPEB) plan: 12% return, funded ratio 132%, no town contribution required.
    • Long-term debt: $4.8 million bonds issued Dec 2024 at 3.6% for 20 years for convention center and golf course clubhouse. Total debt outstanding $114 million. Debt ratings: AA+ (S&P), AA (Fitch), A1 (Moody's).
    • A prior period adjustment of $2.5 million was recorded to implement GASB Statement 101, recognizing all compensated absence liabilities (comp time, unused holiday, sick leave). This decreased beginning net position.
    • Council members discussed debt capacity (5.2% of assessable base ≈ $500M, current debt $114M) and noted that debt service affordability is the real constraint.

D. State Highway Administration (SHA) Fall Update

  • District Engineer Mark Crampton provided updates on multiple projects:
    • Route 50 Bridge: Under-bridge spalling concrete work to finish spring 2026. Interlock system work (fingers locking bascule spans) planned for January 2026, requiring the bridge to open for 2-3 weeks, diverting traffic to Route 90. Painting of the bridge planned for January–March 2026 (45-60 days), bridge will remain closed to vertical clearance but open to vehicles. Fence repairs completed.
    • Route 90 Corridor Study: Planning and Environmental Linkages (PEL) study complete; NEPA study to begin in July 2026 (FY2027).
    • Route 528 Resurfacing: Sections last paved 2016-2020 with 9-11 year life. Northern section (Delaware to 60th St) tentatively in FY2028 (starting July 2027). Crosswalks will be converted to continental style.
    • Fifth Street Post Office Site: Access permit submitted; SHA comments sent to designer in early October; awaiting response. The lot will likely replicate the adjacent Fourth Street lot (58 spaces), but SHA compliance may reduce it to 54 spaces if a second driveway cannot be waived. The two lots will remain separate due to critical area/stormwater requirements.
    • Traffic Signals: 144th Street signal designed but not funded. 50@818 and 50@610 signals in design, with construction expected in 2027. Old Railroad Road intersection project awarded and about to start.
    • Maintenance: Storm drain outfall at 56th Street cleaned; SHA may transfer ownership to town. Route 90 bridge lighting repairs scheduled first week of November. Median fence at old fire station awaiting site redevelopment. Tree replacement at Coastal 137th delayed to spring due to high bids. Route 90 bridge deck needs joint replacement before resurfacing; district will continue patching.
    • Bollards at Route 50 bridge: Repaired after a July letter from the council. SHA had difficulty finding bidders but now maintains a stock of replacement fence panels.
    • Route 90 wall cleaning: Environmental restrictions (need to capture all wastewater) make power washing challenging; SHA will explore options.

E. Fire Hydrant Assessments - Contract Approval

  • Public Works Director Hal Adkins requested approval to award a contract to Xylem Dewatering Solutions, Inc. for hydrant assessments (flow testing, lubrication, GPS data collection) at a cost of $115,000 ($122 per hydrant). Funding is available from the water enterprise fund. The contract uses a piggyback from a Kansas cooperative. Required for ISO ratings affecting insurance premiums. Unanimously approved (7-0).

F. Northside Park Softball Field Lighting - Waiver of Competition

  • Recreation and Parks Director Kate Gaddis and Procurement Manager Matt Perry requested approval to award a contract to Musco Sports Lighting using the Keystone Purchasing Network cooperative contract, with expenditure up to $500,000. The project replaces 1500-watt fixtures on fields 2 and 3 with LED lighting, reducing energy and maintenance costs, with a 10-year warranty. The project is in the FY26 CIP and may qualify for a $28,800 rebate from Delmarva Power. Unanimously approved (7-0).

Key Outcomes

  • Police Commission Report: Acknowledged.
  • Independent Audit: Clean opinion received; no issues.
  • Annual Financial Report: Accepted and will be posted online; citizens' report mailed in November.
  • SHA Update: Information received; council expressed thanks for prompt bollard repairs.
  • Fire Hydrant Assessment Contract: Approved unanimously (7-0) to Xylem Dewatering Solutions, Inc. for $115,000.
  • Northside Park Lighting Contract: Approved unanimously (7-0) to Musco Sports Lighting up to $500,000.
  • Adjournment: Meeting adjourned after all business.

Meeting Transcript

You've got everybody trying to cross the Route 90 bridge. And the line goes back. I've seen it go back to the car wash up on seventy-fourth Street. And if I'm sitting in in that line waiting to, and I've been there for a half hour, and I'm sitting in front of the fire station and the fire alarm goes off and the fire truck wants out. Do I want to give up my place in line so the fire truck can get out? Well, of course, if you're a good citizen, you'd say yes, I'll get in get out of line and go back to the beginning of the line and wait another half hour to go home. But if I'm most people, I'd say, hey, they can wait till the traffic moves a little bit and makes room for them. So to avoid problems with that, I think a no no stopping, no standing zone would be uh helpful. Thank you. Anyone else today? All right, seeing none, we'll move on to new business. Item A, we have an acknowledgement overstanding committee report. We had the police commission meeting on October 15th. Questions about that? Seeing none, we'll move on. Item B, we have an independent audit opinion of the fiscal year 2025 annual financial statements presented by Chris Lehman. Welcome. Thanks for having me. Good afternoon, everyone. Um I have a brief presentation that I'll share that goes over the uh results of our recent uh fiscal year 2025 financial statement audit um for the town. So if we start on slide uh three with scope of services, probably done one. All right, there we go. Okay. Um we've completed the audit of the June 30, 2025 financial statements. In addition, because the uh town has expended more than 750,000 of federal expenditures, there's also what's termed a uniform guidance single audit that's required. That's a uh federally mandated compliance audit. In addition, the state of Maryland requires a uh standalone report that reports uh the revenue and expenditures related to the convention center. The state of Maryland also requires the uniform financial report to be submitted along with the annual financial statements, and that's currently due at the end of this month. Uh once we've finished up the single audit, there's also a data collection form that's required uh to be submitted that we will complete. So those are the um uh deliverables that we've either completed or in the process of completing for the audit. Next slide. Thank you. So we've issued a clean or unmodified opinion on the financial statements, and that says that the financial statements are reasonably free of material misstatement, and that would be the best opinion we could give under professional standards. We discovered no fraud uh through our audit. Our audit isn't a forensic audit, but we are required to have a healthy skepticism of fraud that it could be that it could happen at any time by anyone. We discovered no material weaknesses in the internal controls, and I'll have a slide that highlights the significant controls that we relied on for the audit. We've also received the full cooperation and management, so any records that we requested. Questions that we asked, we obtain obtained uh adequate support and adequate answers to all of our questions. We are in the process of still finishing up the single audit. Uh we have no findings to report to date, and we're still well within the deadline for the single audit. That's due uh March 31st of next year, so there's plenty of time, and we're well within that window. And then lastly, we had no audit entries that we proposed, so that just uh speaks to the quality of the records that we were uh provided for audit. This slide here just shows the key phases of the audit. Um we have the planning phase where we meet with management prior to the audit, understand any changes or significant transactions that we need to be aware of for the audit. Our preliminary testing, we come out and test transactions and understand processes that impact the financial statements, and our final field work phase, we come after management has closed the books and we audit those year-end numbers, and then we review lastly the draft of the report, and we issue our opinion at the conclusion of the audit. Next slide. And then this is uh just a different way to look at our audit process. Really, the audits designed to be a funnel of how we filter out, really, we're filtering out financial statement risk through each process. We're at the end of the process, we can uh give that unmodified opinion once all the financial statement risk has been addressed. Any questions so far?

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