February 24, 2015 Complete Agenda

MAYORANDCITYCOUNCIL
WORKSESSION
Tuesday,February24,20151:00P.M.
AClosedSessionisscheduledfrom10:00AM1:00PM
todiscusslegal,contractualandcollectivebargainingmatters.
AGENDA
1.
CALLTOORDER
2.
REPORTONCLOSEDSESSIONTuesday,February24,201510:00a.m.1:00p.m.
3.
ACKNOWLEDGEMENTSANDRECOGNITIONS
4.
COMMENTSFROMTHEPUBLIC
AnypersonwhomaywishtospeakonamatterscheduledfordiscussionontheWorkSessionAgenda
maybeheardduringCommentsfromthePublicforaperiodofthree(3)minutesorsuchtimeasmay
bedeemedappropriatebytheCouncilPresident.Anyonewishingtobeheardshallstatetheirname,
addressandtheAgendaitemonwhichheorshewishestospeak.
5.
NEWBUSINESS
A. ReportonOceanCityCenterfortheArtspresentedbyRinaThaler,ExecutiveDirectorand
MarianBickerstaff,BoardPresident
B.
RequesttoApproveOceanCityDolphinSculpturePlazapresentedbyChrisTrimper,OCDC
PublicArtCommitteeChairman
C.
PresentationofCrownCastleProposaltoInstallCellularNetworkinOceanCitypresentedby
RebeccaHunter,GovernmentRelationsManager
D. DiscussionofQualityAssuranceProgramEfficiencyImprovementspresentedbyDeputyChief
FireMarshal
E.
WaterandWastewaterRateStudypresentedbyFinanceAdministrator
6.
ADJOURN
WORK SESSION -MAYOR AND CITY COUNCIL

TUESDAY, FEBRUARY 24, 2015
2. Report on Closed Session February 24, 2015 10:00 a.m. 1:00 p.m. Legal, Contractual and Collective Bargaining
Matters
NOTICE OF CLOSED SESSION OF MAYOR & CITY COUNCIL OF OCEAN CITY

DATE AND TIME:
PLACE:
SUBJECT:
VOTE:
Tuesday, February 24, 2015 10:00 a.m.

City Hall
Legal, Contractual and Collective Bargaining Matters
UNANIMOUS
OTHER:
FOR:
AGAINST:
ABSTAIN:
ABSENT:
AUTHORITY: State Government Article: Section 10-508(a) Annotated Code of Maryland

PURPOSES:
1. To discuss:
(i) the appointment, employment, assignment, promotion, discipline, demotion,
compensation, removal, resignation or performance evaluation of
appointees, employees or officials over whom it has jurisdiction; or
(ii) any other personnel matter that affects one or more specific individuals;
2. To protect the privacy or reputation of individuals with respect to a matter that is
not related to public business
3. To consider the acquisition of real property for the public purpose and matters
directly related thereto;
4. Consider a matter that concerns the proposal for a business or industrial
organization to locate, expand or locate in the state;
5. Consider the investment of public funds;
6. Consider the marketing of public securities;
X
7. Consult with counsel to obtain legal advice;
8. Consult with staff, consultants or other individuals about pending or potential
litigations;
9. Conduct collective bargaining negotiations or consider matters that relate to the
X
negotiations;
10. Discuss public security if the public body determines that public discussion
would constitute a risk to the public or public security, including;
a) the deployment of fire and police services and staff; and
b) the development and implementation of emergency plans
11. Prepare, administer or grade a scholastic, licensing or qualifying examination;
12. Conduct or discuss an investigative proceeding on actual or possible criminal
conduct;
13. Comply with a specific constitutional, statutory or judicially imposed
requirement that prevents public disclosures about a particular proceeding or
matter; or
14. Before a contract is awarded or bids are opened, discuss a matter directly related
to a negotiation strategy or the contents of a bid or proposal, if public discussion
X
or disclosure would adversely impact the ability of the public body to participate
in the competitive bidding or proposal process
REPORT OF CLOSED SESSION

OF THE MAYOR AND CITY COUNCIL OF OCEAN CITY
Prior to this open session of the Mayor and City Council being held on Tuesday,
February 24, 2015, a closed session was held on Tuesday, February 24, 2015 at
10:00 a.m. The following is a report of the closed session.
1. A statement of the time, place, and purpose of the closed session is attached.
2. A record of the vote of each member as to closing the session is attached.
3. A citation of the authority under the law for closing the session is attached.
4. (a) Topics of Discussion: Legal, Contractual and Collective Bargaining Matters
(b) Persons present:
Mayor Richard Meehan
Council President Lloyd Martin
City Manager David Recor
Council Members Doug Cymek; Dennis Dare; Wayne Hartman; Matt James;
Tony DeLuca
City Solicitor Guy Ayres
Miles & Stockbridge Counsel Marc Sloane
Police Captain Mike Colbert
Human Resource Director Wayne Evans
Finance Administrator Martha Bennett
City Engineer Terry McGean
Executive Office Associate Diana Chavis
Action(s) taken:
Motion to close meeting:
End Time:

4. COMMENTS FROM THE PUBLIC
Any person who may wish to speak on a matter scheduled for discussion on the Work
Session Agenda may be heard during Comments from the Public for a period of three
(3) minutes or such time as may be deemed appropriate by the Council President.
Anyone wishing to be heard shall state their name, address and the subject on which
he or she wishes to speak.

5. NEW BUSINESS
A. Report on Ocean City Center for the Arts presented by Rina
Thaler, Executive Director and Marian Bickerstaff, Board
President
TOWN OF
The White Marlin Capital of the World
TO:
FROM:
RE:
DATE:
Agenda Item #
5A
Council Meeting
February 24, 2015
The Honorable Mayor, Council President and Members of Council

David L. Recor, ICMA-CM, City Manager
Ocean City Center for the Arts
February 18, 2015
ISSUE(S):
Report on Ocean City Center for the Arts
SUMMARY:
Rina Thaler, Executive Director, and Marian Bickerstaff, Board

President, will present the 2013 Annual Report, which was
distributed in October 2014, and share program and event
highlights.
FISCAL IMPACT:
Not applicable
RECOMMENDATION:
Not applicable
1st Class Resort & Tourist Destination
ALTERNATIVES:
Not applicable
RESPONSIBLE STAFF:
Not applicable
COORDINATED WITH:
Not applicable
ATTACHMENT(S):
1) 2013 Annual Report

2) Building Community through Art
3) PowerPoint
MISSION
To promote the visual arts in the Ocean City area through education,
exhibits, scholarships, programs and community art events.
VISION
To be a vibrant, fiscally sound arts organization with community sponsorship, service
and valued membership benefits, offered in a spacious and functional facility.
The new Ocean Center for the Arts, located at 502 94th Street, Ocean City, Maryland
is the home of the Art League of Ocean City, founded in 1963.
PRESIDENTS MESSAGE:
We happily celebrate our first full year of operating the new Ocean City Center for the Arts. The dreams
of so many have been realized through the creation of the spacious new Center allowing for expanded
programming for people of all ages.
Affirmation of the ALOCs significant contribution to the community has come from elected officials,
artists, residents and visitors alike. We are delighted in the attendance at our monthly exhibit receptions,
our class registration, membership and corporate sponsor growth, and so many willing volunteers who
support our staff. And, with our expanded programming, we have experienced a 44% increase in our net
income from the prior year.
Because sustaining our mission is critical, the Board of Directors sought professional help in preparing a
strategic plan for the near future with a goal of good stewardship coupled with measured expansion of
our programs. We are grateful for the public support and generosity of our donors and sponsors and the
ability to be operating from a financially healthy positon. We will continue to work hard to meet your
expectations.
Yours in Service,
Marian Bickerstaff, ALOC Board President
Making An Impact in the Community

2013 was a landmark year for the Art League of Ocean City as we opened the
new Ocean City Center for the Arts during our 50th Anniversary year!
(Data Collected from May-December, 2013)
873
STUDENTS
752
MEMBERS
11,120
VISITORS
10,241
WEBSITE
VISITS
174
ART CAMP KIDS
6,451
VOLUNTEER
HOURS
Grand opening CelebrationMarch 1, 2013
Thank You to all of our generous donors and corporate sponsors who have supported the Art League of Ocean City in its
mission to promote the visual arts in the Ocean City area. We
are grateful for the support of each and every gift.
2013 Annual Campaign Donors

Junis Adkins
Jeff and Jamie Albright
Nancy Barrett
Marian Bickerstaff
Patricia Bielecki
Castle in the Sand
Ed & Emmy Challenger
Roland and Sue Dennis
Sandra Esham
John & Betty Everson
Carl Forsberg
Nancy Fortney
Gerilyn Gaskill
Julie & Bill Gibbs
Gudelsky Family
Foundation
Louise Gulyas
Barbara & Ron Hager
Anne Hanna
Evelyn & Jack Hartman
Phyllis Gillie Jaffe
Drs. Phyllis & Leonard Jaffe

Judy & Chris Kahl
Thomas & Dorothy Kelso
Fay Kempton
Andrew Kennery
Judy King
Josephine Kingsley
Jeanne Landau-Cohen
Buck Mann
Ursula McMahon
Barbara Melone
Kim & Jim Morgan
Jeanne Mueller
Wayne & Ginny Outten
Outten & Golden*
Barbara Patrick
Clark Prichard
Dave and Sally Rivello
Russ and Anita Roberts
Nicholas Ruggieri
Barbara & Donald Schmid
Herb and Judy Schoellkopf

Emily & Paul Schwab
Virgil and Jeanne Shockley
Judy & Graham Slaughter
Ann & Terry Terrell
Rina and Jeff Thaler
Jon and Judy Tremellen
Janet Trimper
Tyler & Company PA
Margery Violetta Ropko
Kim & Jim Wagner
Joann & Ed Wehnert
Joel and Patti Wiedermann
Gee & Betsy Williams
*Matching Corporate Gift
LEAVE A LASTING IMPRESSION!

Are you looking for an opportunity to honor loved ones or
immortalize your creative thoughts? Consider purchasing an
Impression Paver in the Ocean City Center for the Arts
front courtyard. The durable bricks are available in two sizes4x8 and 8x8 at a cost
of $100 and $150 respectively. For more information about the pavers and ordering, visit
our website at www.artleagueofoceancity.org .
Corporate Benefactors
Atlantic Planning Development & Design
Clarion Resort Fontainebleau Hotel
Donaway Furniture
Frescos Restaurant
Mackys Bayside Bar & Grill
Corporate Patrons
Community Foundation of the Eastern Shore
Delmarva Power
Glitter & Gold
Tyler & Company, P.A.
Corporate
Friends
Ayres, Jenkins, Gordy &
Almand
Bank of Ocean City
Barbara Melone, Realtor
Insurance Management
Group
Katy Durham & Rick
Meehan, Realtors
Ocean City Parrothead
Club
Pacos Paradise Inc
Corporate Sponsors
In-Kind Donors
Atlantic Dental Cosmetic & Family Dentistry

Bayside Skillet
Berlin Interventional Pain Management
BJs on the Water
Bonfire Restaurant
Candy Kitchen Shoppes
Charter Financial Group
Fagers Island Ltd
Harrison Group
Kay Ayres Interior Design, Inc
Kokkinos Creative Jewelers
Mann Properties
Maryland Coast Towing
Ocean City Elks Lodge #2645
Old Pro Golf
Chesapeake Landscaping
Clean Team
Planet Maze/Lasertron/
Lost Galaxy Golf
Princess Royale
Ocean Front Hotel
Robin Walter Day Spa
Russell T. Hammond
Surveying. LLC
The Framing Corner
Trattoria Lombardis
Vanderbilt Weddings
D3 Corp
East Coast Property Mgmt
Restaurant Reception Donors

BJ's on the Water
Blu Crabhouse & Raw Bar
Blue Ox Bar & Grille
Bull on the Beach
Catering by Macs
Centerplate Catering
Clarion Resort
Coffee Beanery
Desserts by Rita
Fagers/ Hotel Atlantic
Fresco's Restaurant
Galaxy 66
The Globe
The Green Turtle
Harpoon Hannas
The Hobbit
Hooked
Lighthouse Sound
Liquid Assets
Macky's
Mothers Cantina
Phillips
Pirates Den & Galley
Pickles Pub
Princess Royale
Rosenfeld's Jewish Deli
Seacrets
Simmer Time
Thank you to the generosity of the homeowners, volunteers and participants who continue to
make this annual event our major fundraiser.
Something Magical Happens Here
ARTISTS PAINT 0C
BROWN BOX THEATRE NINA VARIATIONS
2013 SCHOLARSHIP WINNER,

ISABELLE IAMPIERI
BOARD OF DIRECTORS
PRESIDENTMarian Bickerstaff
1ST VICE PRESIDENTEmily Schwab
2ND VICE PRESIDENTKaty Durham
TREASURERKaren Turner
CORRESPONDING SECRETARY
Jamie Albright
RECORDING SECRETARY
Emmy Challenger
Ann Terrell
Barbara Melone
Barbara Patrick
Barbara Tyler
Gayle Widdowson
Judy Tremellen
Karen Tomasello
Kim Wagner
Lisi Ruczynski
Michelle Fager
Nancy Fortney
2013 KEY INCOME & EXPENSES COMPONENTS
OPERATING INCOME
OPERATING EXPENSE
STAFF
Rina Thaler, Executive Director
Jacquie Warden, Katie Rosinski,
Mallory Hanback & Nancy Barnas
2013 STRATEGIC GOAL ACHIEVEMENTS

Financial Stability
Conducted a financial audit.
Continued to maintain a sufficient Operating Reserve Fund.
Created an annual fund appeal.
Programming
Surveyed members to determine interest and assess demand.
Attracted a more diverse mix of artists working in all media .
Increased number and variety of classes, lectures, outreach and events.
Operations
Hired an Executive Director and additional staff.
Created comprehensive policies and procedures for operations and oversight.
Upgraded bookkeeping and data management systems.
Marketing
Upgraded the website and began using social mediaFacebook, Twitter & Instagram.
Use of radio and local TV media .
The Art League of Ocean City is a 501(c)3, organized in the state of Maryland. A copy of our current financial statement is available upon request
by contacting the Art League of Ocean City at P.O. Box 3503, Ocean City,
MD 21843. (Phone 410.524.9433). Documents and information submitted
to the State of Maryland under the Maryland Charitable Solicitations Act
are available from the Office of the Secretary of State for the cost of copying and postage.
Building Community Through Art

The mission of the Art League of Ocean City is to promote the visual arts in the
Ocean City area through education, exhibits, scholarships, programs and
community art events.
The vision of the ALOC is to be a vibrant, fiscally sound arts organization with
community sponsorship, service and valued membership benefits, offered in a
spacious and functional facility.
The ALOC is the only non profit organization in Ocean City dedicated the
enrichment of life through the visual arts. Its home, the 7500 sq ft Ocean City
Center for the Arts is a destination for fine arts featuring 2 galleries, 5 artist
studios, an art library, multiple classroom spaces and a pottery studio.
Clients Served:
16,909 visitors in 2014 (30,000 since new building)

1,258 art instruction students
3,000 children including art camp and school trips
7,000 volunteer hours logged (6 FTE)
Programs Include: Monthly Art Exhibits featuring regional and local artists
Offsite exhibits at Conv Center & Chamber
Youth Art Shows ( twice yearly)
Empty Bowl Project with Diakonia
Artist Paint O.C. A Plein Air Event
Art with a Heart- Outreach programs
Free Art Talk Series
Art Scholarship Awards
Summer Art Camp with OC Rec Dept
Play it Safe- Tie Dye
Teacher Professional Development
Arts Alive- assist Town of Ocean City with event
Creative Fundraising ACS, Humane Society
UPCOMING HIGHLIGHTS
February 24, 6-8PM: "Travelwalk: Poems and Images
March 21, 5-8PM: Empty Bowl Project Soup Dinner
April 7, 6-7PM : Artists Rights and Copyright Law presentation
May: Brown Box Theatre: "Boxer Shorts"
June: " I Remember When I Paint " film and workshop
August: Patrick Henrys exhibit Moments in Color, Texture, and Light
September 17-18: Sand Castle Home Tour

5. NEW BUSINESS
B. Request to Approve Ocean City Dolphin Sculpture Plaza
presented by Chris Trimper, OCDC Public Art Committee
Chairman
TOWN OF
TO:
FROM:
RE:
DATE:
Agenda Item #
5B
Council Meeting
February 24, 2015

Request to Approve Ocean City Dolphin Plaza
February 17, 2015
ISSUE(S):
Request approval for the OC Dolphin Plaza
SUMMARY:
In 2014, the City Council approved Ocean City Development

Corporations (OCDC) request to install a dolphin sculpture and
base at the southwest corner of Route 90 and Coastal Highway,
near the OC Tennis Center.
In December 2014, the OCDC hired Harkins Construction to
create a concrete base at the sculpture location. The dolphin
sculpture, designed by David Turner of Turner Sculpture, is
complete and ready for installation. The OCDC intends to install
the sculpture on Tuesday, April 14, 2015, which is also
International Dolphin Day.
As part of this public art project, the OCDC is requesting
approval from the City Council to install a plaza at this same site
to complement the sculpture. The OCDC and its Public Art
Committee are recommending that the plaza consist of brick
pavers, a masonry wall, and landscaping. The masonry wall with
brick face will be located on the west side of the dolphin
sculpture and represent an attractive background. The wall will
also contain donor plaques recognizing individuals and
organizations who contribute significantly towards this public
artwork project. There will be ground mounted lighting as well as
lighting on the top of wall.
FISCAL IMPACT:
$30,000 through OCDC fundraising and OCDC Public Art Fund.

All funds for this project will be raised through private
contributions to the OCDC, which is classified as a charitable
nonprofit organization. Contributions for this project are tax
deductible. Initial fundraising began in 2014. Fundraising
strategies will be expanded in 2015.
RECOMMENDATION:
Approve project as presented.

Revitalized Ocean City: Development and Redevelopment
ALTERNATIVES:
No alternatives suggested.
RESPONSIBLE PARTY:
Chris Trimper, Chair, OCDC Public Art Committee
COORDINATED WITH:
Hal Adkins, Director of Public Works

Susan Petito, Director of Recreation & Parks
ATTACHMENT(S):
Plaza design plan with dolphin sculpture
D
5
EXISTING
TENNIS CENTER
3D
3D
D
2
A R C H IT E C T U R E
E N G IN E E R IN G
1D
4D
5
.
0
'
Dover, DE
PLAZA WITH
RADIUSED WALL
& SCULPTURE
1D
2D
3D
EXISTING MEMORIAL TREE TO REMAIN
4D
REMOVE AND RELOCATE EXISTING SIGNAGE
FLOOD LIGHT
FIXTURE THREE PER
WALL TYPICAL.
MANUF AND MODEL
TO BE COORDINATED
BY CONTRACTOR
REMOVE EXISTING CONCRETE CURB

REMOVE EXISTING CONCRETE SIDEWALK
LANDSCAPE
AREA
5D
LANDSCAPE
AREAS
EXISTING STEPS TO BE REMOVED

REPAIR AND EXTEND DECK RAILING
AS REQUIRED
8" CMU
Salisbury, MD
312 West Main St. Suite 300
Salisbury, MD 21801
FACE BRICK
SEE ELEVATION
FOR TYPES
410.546.9100
Wilmington, NC
FACE BRICK TYPE 1
STACK BOND
1"
DEMOLITION PLAN
FACE BRICK TYPE 2

ACCENT BAND
RECESSED STACK BOND
EXISTING
SIDEWALK
4'0"
FACE BRICK TYPE 1

STACK BOND
BRICK PAVERS- SIZES VARY.

REFER TO MANUF. DETAILS
FOR COURSING & ADDITIONAL
INSTALLATION DETAILS
1' 4"
EXISTING
PARKING
LOTS
DUR-O-WALL @ 16" O.C.
2'0"
3'0"M I
N.
FLOOD LIGHT
FIXTURE THREE PER
WALL TYPICAL.
MANUF AND MODEL
TO BE COORDINATED
BY CONTRACTOR
www.beckermorgan.com
ACCENT BANDS
RECESSED12"
DONOR RECOGNITION
PLAQUE. COORDINATE
SIZE & LOCATION WITH
OWNER PRIOR
TO INSTALLATION
#4 @ 16" O.C.
3 #4 CONT.
1'0"
6" COMPACTED STONE

AGGREGATE BASE
3205 Randall Parkway, Suite 211

Wilmington, NC 28403
FACE BRICK TYPE 2

ACCENT BAND
RECESSED STACK BOND
8" CMU
2" BEDDING SAND
16' 4"
910.341.7600
4"
SCALE: NTS
STAMPED
CONCRETE
WALKWAY TO
EXISTING
SIDEWALK
302.734.7950
CAST STONE
WALL CAP
1' 6"
2A
309 S Governors Ave

Dover, DE 19904
CONCRETE FOOTING
COMPACTED SUB-GRADE
TYP.
3' 0"
CONDUIT FOR LIGHTING

TO BE COORD BY
CONTRACTOR
SITE PLAN
SCALE: 1" = 20'0"
2B
DETAIL PAVER/SLAB
SCALE: 1 1/2" = 1'0"
MASONRY WALL DETAILS

SCALE: 1/2" = 1'0"
PROJECT TITLE
OCDC DOLPHIN
SCULPTURE
PLAZA
RADIUSED MASONRY
WALL WITH INSET
DONOR PLAQUES.
SEE DETAILED VIEWS
62ND STREET & COASTAL

HIGHWAY
OCEAN CITY, MD
SITE LIGHTING - MOUNTED

ON CAP OF MASONRY WALL
BASIS OF DESIGN :XXX OR EQUAL
PRELIMINARY
DESIGN CONCEPT ONLY
SUBJECT TO
FURTHER REVISIONS
NOT FOR CONSTRUCTION
NOT FOR PERMITS
LANDSCAPE BED
SEE PLANTING LIST
R 1
3'0
"
SEE STRUCTURAL DRAWINGS

FOR DETAILS RELATED TO
STATUE INSTALLATION
ISSUED:
CONCRETE PEDASTAL
FOR SCULPTURE CENTERED
IN PLAZA. SEE ENLARGED
SECTIONS FOR CERAMIC
TILE VENEER DETAILS
A101
EXIST. DECK
& RAIL PATCH
AND REPAIR AS
REQUIRED
12/1/14
SHEET TITLE
CONCEPT PLANS
GROUND MOUNTED
SITE LIGHTING - BASIS OF
DESIGN :XXX OR EQUAL
LANDSCAPE BED SEE PLANTING LIST
BRICK PAVERS OVER
SAND BED - SEE DETAIL
2/A101 BASIS OF DESIGN:
XXX OR EQUAL
EXISTING SIDEWALK TO
BE REMOVED. SEE DEMO PLANS
LANDSCAPE BED
SEE PLANTING LIST
GROUND MOUNTED SITE

LIGHTING - BASIS OF
DESIGN :XXX OR EQUAL
EXISTING SIDEWALK
4
T '4
Y "
P
.
SHA - RIGHT OF WAY/

PROPERTY LINE
ISSUE BLOCK
EXISTING MEMORIAL
TREES TO REMAIN
EXISTING SIGNAGE
TO BE RELOCATED
STAMPED CONCRETE SIDEWALK

CONNECT TO EXISTING SIDEWALK
& PARKING LOT. COORDINATE WITH
EXISTING GRADES AS REQUIRED
EXISTING CONCRETE
CURB TO REMAIN
EXISITNG
PARKING LOT
TO REMAIN
MARK
DESCRIPTION
PROJECT NO:
EXISTING SWALE COORD.DRAINAGE
REQUIREMENTS WITH INSTALLATION
OF NEW SIDEWALK
2014131.00
DATE:
2/3/15
SCALE:
RELOCATE EXISTING SHA SPEED LIMIT

SIGN AS REQ'D BASED ON LOCATION
OF NEW SIDEWALK CONNECTOR
DATE
AS NOTED
DRAWN BY: WES
PLAZA PLAN
SCALE: 1/8" = 1'0"
OUTLINE SPECIFICATIONS & RENDERING
PROJ MGR: WES
A101
COPYRIGHT 2010
F:
\
V8\
Pr
oj
ect
s\
2014\
201413100\
dgn\
201413100a101.
dgn
EXISITNG
PARKING LOT
TO REMAIN
2/
10/
2015
4'4"
TYP
.
EXISTING ELECTRONIC SIGN TO

REMAIN

5. NEW BUSINESS
C. Consideration of Crown Castle Proposal to Install Cellular
Network in Ocean City presented by Rebecca Hunter,
Government Relations Manager
TOWN OF
TO:
THRU:
FROM:
RE:
DATE:
Agenda Item #
5C
Council Meeting
February 24, 2015

Terence J. McGean, PE, City Engineer
Crown Castle Right of Way Agreement
February 18, 2015
ISSUE(S):
Consideration of Crown Castle proposal to install mini cell tower

sites in Ocean City
SUMMARY:
The City has been approached by Crown Castle, Inc., a

telecommunications company, with a proposal to install a
Distributed Antenna System (DAS) cellular network in Ocean City.
The DAS network would improve cellular bandwidth and signal
strength. The majority of installations will be on DPL poles which
are regulated by the Maryland Public Service Commission; however,
Crown Castle has also requested to place some installation on the
Boardwalk and other City owned structures.
FISCAL IMPACT:
A fee for rights to use City Right-of-Way would be negotiated.
RECOMMENDATION:
Schedule a public hearing on this topic and then determine which, if

any, City facilities would be acceptable for use by Crown Castle.
More Livable Community for Residents
ALTERNATIVES:
Reject Crown Castles request to use City facilities.
RESPONSIBLE STAFF:
Terence McGean, City Engineer
COORDINATED WITH:
Hal Adkins, Public Works Director

Guy Ayres, City Solicitor
ATTACHMENT(S):
1)
2)
3)
4)
Crown Castle presentation

Crown Castle FAQ Document
Photo of typical DPL pole installation
Photo of typical decorative street light installation
02/24/15
Town of Ocean City
City Council Work Session
Crown Castle NG Atlantic

DAS Presentation
Crown Castle - Company Background

Crown Castle, through various subsidiaries, provides wireless carriers with the
infrastructure they need to keep people connected and businesses running.
Approximately 40,000 towers, 13,000 small cell nodes and 6,000 miles of
fiber
The nations largest provider of shared wireless infrastructure with a
significant presence in the top 100 US markets with a total enterprise value
of over $30 billion dollars.
Proprietary &
Confidential
The Foundation for a Wireless World.
| 1
Crown Castle At-a-Glance

In business for 20 years
NYSE:CCI; Market capitalization of over $30 billion
Fortune 1000 Company
S&P 500 Company
Total revenue of more than $3.0 billion
Total enterprise value of more than $30 billion
Our customers include the wireless communications companies Sprint, T-Mobile,
AT&T, and Verizon Wireless who accounted for approximately 90% of Crown
Castles 2013 revenue
We have CLEC status licenses and other necessary legal and regulatory documents
to operate small cell networks in 46 states and the District of Columbia
Nationwide, we have over 450 existing agreements with jurisdictions and over 300
existing agreement with utility companies
Proprietary &
Confidential
The Foundation For a Wireless World.
| 2
Crown Castle Is A True Ally For Your Community
Collaboration:
We involve you, the carriers, and nearby residents in every major decision, so you have a say in the solutions that are deployed.
Local presence:
We have people working in offices nearby who understand your community and know how to get things done quickly.
National footprint:
Our status as the nations largest shared wireless infrastructure provider means we have strong relationships with all the
wireless carriers at the local, regional, and national levels, so we can maximize new revenue opportunities for your
community.
Public safety:
You get space on each new tower we develop to use to expand your public safety network.
Buying power:
Where commercial value doesnt existfor example, when developing new infrastructure for a public safety networkwe can
use the clout of our purchasing department to get you the best price possible.
Flexibility:
Our solutions utilize a mix of your undeveloped land, buildings, and existing public utility poles, traffic signal poles,
streetlights, or other owned or controlled property.
Single point of contact:

No need for your staff to deal with the hassle of negotiating with each wireless carrier. We handle all that for you and are here
for any questions or concerns you may have.
Community outreach:
We have a best-in-class community outreach team that will develop community-friendly solutions and proactively meet with
residents to make sure their concerns are heard.
Proprietary &
Confidential
| 3
New Revenue and Wireless Solutions

We take a proactive approach to developing solutions that address both an
entitys unique challenges and its wireless broadband infrastructure needs.
RF Analysis, Planning and Design
Zoning Ordinance
Marketing of Existing Assets
Industry Leading Market Tools
Land and Rooftop Development
Distributed Antenna Systems (DAS)
Monetizing Revenue Streams
Proprietary &
Confidential
| 4
What is DAS (Distributed Antenna System)?
Proprietary &
Confidential
| 5
Proprietary &
Confidential
Title - populate in "Footer"
| 6
Examples of DAS Node
Proprietary &
Confidential
The Foundation for a Wireless World.
| 7
Ocean City Photo Simulations
Proprietary &
Confidential
| 8
Ocean City Node Locations - Overview
Proprietary &
Confidential
| 9
Next Steps
1. Execute Franchise or Right-of-Way Use Agreement between Town and Crown

Castle
2. Define Specific Permit Processing and Review Requirements for DAS
3. Discuss Scheduling Requests and Requirements for DAS Deployment
4. Evaluate Additional Services Crown Castle Can Provide the Town
Proprietary &
Confidential
The Foundation For a Wireless World. | 10
Thank You
FOR FURTHER INFORMATION
PLEASE CONTACT:
Rebecca Hunter
(425) 591-9356
Rebecca.Hunter@crowncastle.com
Proprietary &
Confidential
| 11
MD GUIDE
July, 2014
Version No. 1.0
A Local Officials Guide:

RESPONDING TO A TELECOMMUNICATIONS APPLICATION
FROM CROWN CASTLE NG ATLANTIC LLC (Crown Castle)
Maryland
Crown Castle has submitted to you an application under the federal Communications Act for access to the public
rights of way to construct facilities necessary to provide telecommunications services. In order to assist you in
analyzing and responding to Crown Castles application, Crown Castle sets forth below answers to common
questions raised by local officials upon receipt of such an application.
Q.
Who is Crown Castle?
A.
Crown Castle is a next-generation communications company that provides managed RF transport
and backhaul services to wireless communications service providers, including mobile network operators and
public wLAN service providers. Crown Castles innovative and cost-effective RF-over-Fiber (RFoF) transport
solution enables wireless service providers to expand their coverage and/or capacity throughout metropolitan
regions and in dense urban and isolated suburban areas. Crown Castle is a nationwide company that operates
regional subsidiaries throughout the United States. More information is available at www.crowncastle.com
Q.
What kind of service does Crown Castle provide?
A.
Crown Castle provides Telecommunications Services. Specifically, it carries voice and data traffic
handed off to it by wireless providers (such as cellular and PCS). It carries that traffic via its fiber optic lines from
antennas located on utility and/or street light poles to a central switching-like location, and from there, either
back to another antenna or out to the public switched telephone network or Internet.
Q.
What is Crown Castle asking of the Municipality?
A.
Crown Castle is applying for the right to construct, operate, manage, and maintain a
telecommunications network in the public ways of the municipality in compliance with the municipalitys
ordinances and permitting requirements in order to serve its wireless customers and to improve wireless coverage
MD GUIDE
July, 2014
Version No. 1.0
and capacity in the Municipality. To that end Crown Castle has submitted a proposed form of right of way use
agreement (RUA) that asks for the following:
the right to enter into the public way to provide telecommunications services;
the right to utilize Municipally-owned streetlight poles and traffic signal poles for an agreed annual fee for
the collocation of Crown Castles facilities;
the right to utilize third-party-owned property (utility poles) in the public way for deployment of Crown
Castles network;
the right to utilize any available Municipally-owned fiber for an agreed annual fee for the collocation of
Crown Castles facilities; and
the right to utilize any available Municipally-owned conduit for an agreed annual fee for the collocation of
Crown Castles facilities;
Q.
How long do I have to respond to Crown Castles application?
A.
Under federal law, local authorities must act on Crown Castles application, in writing,
expeditiously. Unreasonable delay or a failure to act expeditiously has been held to constitute an unlawful barrier
to entry under federal law.
Q.
What information can I require from Crown Castle?
A.
Local authorities may only request information directly related to Crown Castles physical
construction in and occupation of the public rights of way. Local authorities are prohibited from inquiring into
the legal, technical, or financial qualifications of Crown Castle or other matters unnecessary for the local
authoritys ability to oversee Crown Castles construction and manage the public rights of way.
Q.
Am I permitted to impose restrictions on Crown Castles use of the public rights of
A.
Local authorities are permitted only to manage Crown Castles construction and physical
way?
occupation of the public rights of way. This has been held to include matters such as requiring insurance or bonds
and imposing standard construction permitting and safety regulations. This authority has also been described as
extending to the time and manner of construction.
MD GUIDE
July, 2014
Version No. 1.0
Q.
Can the Municipality regulate Crown Castles activities as a telecommunications
provider in the public rights-of-way?

A.
No. Section 253 of the Communications Act and Maryland law prohibit local authorities from
regulating the provision of telecommunications services.
Q.
Am I required to treat Crown Castle in the same way as the Municipality treats the
incumbent local telephone company?

A.
Yes. Local authorities must treat competitive providers, like Crown Castle, in a competitively
neutral and non-discriminatory manner.
As a result, local authorities cannot impose on Crown Castle
requirements or fees that are not imposed on the incumbent Bell Company, Verizon.
Q.
Who will own the equipment utilized in Crown Castles network and what impact
does that have on Crown Castles rights?

A.
Crown Castle will own the fiber by means of which it provides RF Transport Services in all cases.
The optical repeaters and antennae may be owned by either Crown Castle or its carrier customers; however, in all
cases the optical repeaters and antennae will incorporated into the Crown Castle network, even if title remains
with the customer. Under Maryland law, a telephone company is defined and interpreted expansively to include
operators who both own and lease property to provide telecommunications service. Because under its tariff and
agreements, Crown Castle will use and operate property and incorporate such property into its network, including
the optical repeaters and antennae, those facilities are part of Crown Castles network and accorded the same
rights as the rest of Crown Castles network facilities.
This is a new model that Crown Castle is pioneering and with which the Municipality may not be familiar. Thus,
although title to certain equipment may remain with Crown Castles customer in a particular installation, that
equipment will nonetheless constitute a part of Crown Castles network and may also remain part of the
customers larger wireless network in an overlapping circles architecture. In all cases, permit applications will
be submitted either solely by Crown Castle or jointly with its customer, and Crown Castle will be responsible to
the Municipality under the applicable permit in all cases.
MD GUIDE
July, 2014
Version No. 1.0
Q.
What are the consequences if the Municipality fails to respond to Crown Castles
application or restricts its right to provide its services?

A.
Local authorities are required to act on Crown Castles request within a reasonable time. The FCC
has determined that a presumptively reasonable time for applications to attach to an existing facility is 90 days
and for applications to install a new facility is 150 days.
Q.
Has Crown Castle been certified by the State to provide telecommunications
services?
A.
Yes. Crown Castle has received a Certificate of Public Convenience and Necessity from the
Maryland Public Service Commission.
Q.
Is Crown Castle a wireless provider?
A.
No. Crown Castle is not licensed to provide wireless services and does not control any wireless
spectrum. Crown Castle is a carriers carrier whose customers are wireless providers.
Q.
What facilities does Crown Castle need to install to provide service in our
community?
A.
Crown Castle provides its service with a combination of fiber optic lines connected to small
wireless antennas, optical repeaters, and associated equipment. Thus, it must generally install a certain amount
of fiber optic cable, either underground or on existing utility poles. In addition, it must install small wireless
antennas and associated equipment on utility poles and/or streetlight poles, typically located in the public rights
of way. When possible and appropriate, Crown Castle may lease capacity on existing fiber optic facilities owned
by the Municipality or other providers, thus diminishing the physical impact of Crown Castles installation.
Q.
Will Crown Castle use existing utility poles?
A.
Crown Castle will generally seek to collocate its facilities on existing utility or streetlight poles,
typically located in the public rights of way. To the extent that it will be using privately owned utility poles, Crown
Castle has entered into (or is in the process of entering into) any necessary pole attachment agreement. The
federal Pole Attachment Act governs the rates, terms, and conditions that private utility pole owners may impose
on Crown Castles access to such poles.
MD GUIDE
July, 2014
Version No. 1.0
Q.
Will Crown Castle need to install any new poles of its own?
A.
Generally, no; however, if there is no available infrastructure, or if the Municipality does not wish
to allow Crown Castle to attach to its streetlight or traffic poles, Crown Castle may need to install its own utility
poles. In such cases, Crown Castle will comply with all lawful local regulations governing such installations.
Q.
What are the benefits from Crown Castles entry into our community?
A.
First, Crown Castles service allows the wireless carriers to expand the coverage and capacity of
wireless services, with less intrusive facilities. Traditional wireless technologies have suffered from dead spots
and bandwidth capacity limitations. Crown Castles combination of fiber optics and lower antennas helps wireless
providers eliminate dead spots and increase bandwidth needed for emerging and future services.
Second, Crown Castle introduces competition that will help provide more service choices and more competitive
prices for consumers.
Q.
What are Crown Castles rights under Federal law?
A.
Section 253 of the Communications Act grants Crown Castle the right to provide
telecommunications services and prohibits municipalities from imposing requirements that prevent Crown Castle
from providing telecommunications services or that have the effect of prohibiting Crown Castle from providing
telecommunications services. Court decisions applying Section 253 have held that any municipal requirement
that materially inhibits Crown Castles ability to compete is preempted. This includes imposing on Crown Castle
requirements such as fees or franchises that are not imposed on the incumbent telephone company. Ultimately,
municipalities may not exercise discretion over whether Crown Castle can access the public rights of way and
provide service.
Section 253 reserves for municipalities only the authority to manage Crown Castles physical
occupation of the public rights of way (i.e., construction permitting and safety issues). Crown Castle complies
with all applicable and lawful local permitting requirements concerning construction in the public rights of way.
Q.
Are harmful radio frequency emissions an issue with the equipment related to
Crown Castles service?

A.
No. The wireless antennas associated with Crown Castles service produce RF radiation at levels
well below the FCCs permitted maximums for general-population, uncontrolled exposures, which are themselves
MD GUIDE
July, 2014
Version No. 1.0
conservatively low. Indeed, the facilities associated with Crown Castles services are categorically excluded from
the FCCs requirement for routine environmental compliance testing for RF exposure.
LARSON D.A.S. LIGHT POLES

DESIGN DRAWINGS
T.O. Structure
30-0
C.L. Upper Antenna

27-0
T.O. FRP Pole

24-6
T.O. Base Cabinet

3-8
LARSON CABINET HOUSES SUPPORT EQUIPMENT FOR D.A.S.

STRUCTURE. ALL EQUIPMENT CAN
BE INSTALLED AND MAINTAINED
BY A SINGLE INDIVIDUAL
THROUGH LOCKABLE PANEL
DOORS.
All imagery and text within this document is proprietary of Larson Camouage LLC. The concepts herein have been developed exclusively by Larson Camouage LLC., any
reproduction or unauthorized use of the concepts and information is prohibited.

5. NEW BUSINESS
D. Discussion of Quality Assurance Program Efficiency
Improvements presented by Deputy Chief Fire Marshal
TOWN OF
TO:
THRU:
FROM:
RE:
DATE:
Agenda Item #
5D
Council Meeting
February 24, 2015

Fire Marshal David Hartley
Quality Assurance Program (QAP) Recommended Efficiency Improvements
February 2, 2015
ISSUE(S):
Outsourcing QAP data management, correspondence and billing
SUMMARY:
In 2001, the QAP was adopted by ordinance with approximately

1,700 fire protection systems with an associated fee of $25 per
system. In 2005, by Resolution, the fee was increased to $30 per
system to cover the cost of the program. Today there are
approximately 2,500 systems managed in the QAP.
QAP data management, correspondence and billing are currently
done in-house. Outsourcing these procedures to a third party
web-based system will allow employee work hours to focus on
field operation, the timely enforcement of fire protection systems
deficiencies and non-testing, will ensure that property owners
receive quality service by verifying code compliance of third
party inspections, and encourage a goal of increasing the
number of systems tested and billed annually.
FISCAL IMPACT:
Based on the current inspection fee of $30, estimated cost of

outsourcing data management, correspondence and billing to a
third party web-based system is +/- $10 per system or $22,000.
Projected FY16 revenue for the QAP is $66,000.
RECOMMENDATION:
Send out a Request for Proposal (RFP) for outsourcing portions of

the QAP for a third party web-based system, and draft
amendments to ordinance that allow the changes.
Excellent Service through a High Performing Town Organization
ALTERNATIVES:
No staff recommended alternatives.
RESPONSIBLE STAFF:
Fire Marshal David Hartley

Deputy Fire Marshal Ryan Whittington
COORDINATED WITH:
Budget Manager Jennie Knapp

Finance Administrator Martha Bennett
ATTACHMENT(S):
1) Current QAP Code Chapter 34 Article V

2) Estimated Budget Impact Examples
Ocean City Fire Marshals Office

Estimated
Quality Assurance Program
Budget Impact Examples
Using estimated FY 16 budget revenue numbers for the QAP as an example:

Budgeted $66,000 in revenue for the QAP, which would be 2200 systems tested and reviewed
at $30 a system
2200 (systems) x $30 = $66,000
With 2200 systems reviewed at a fee of $35 or $40
2200 (systems) x $35 = $77,000
An increase of $11,000
2200 (systems) x $40 = $88,000
An increase of $22,000
Estimated Fee for outsourcing is $10 per system
2200 (systems) x $10 = $22,000
Projected revenue less fee
@ $30/system; $66,000 - $22,000 = $44,000 actual revenue
With improved data management and a refocus of employee hours on non-tested and
delinquent systems, we estimate increasing the number of system tested and billed annual by
10%, which is 220 systems or;
@$30 - $10/system x 220 = +$4,400
@$35 - $10/system x 220 = +$5,500
@$40 - $10/system x 220 = +$6,600
ARTICLE V. - QUALITY ASSURANCES PROGRAM
Sec. 34-121. - Purpose; intent.

(a) The purpose of this article is to assure that the fire protection system provided in the Town of Ocean
City will function as intended in the event of an emergency; also to assist the owners of the fire
protection systems in receiving proper service from the contractor/company who install, test, and
inspect and/or perform maintenance for the fire protection systems.
(b) The intent of this article is to provide the Office of the Fire Marshal with the resources and a mechanism
to respond to complaints and inquires regarding the fire protection systems, also follow-up on
inspections reports that show deficiencies within the systems and to verify that the systems have been
corrected and in operational condition in the Town of Ocean City.
(Ord. No. 2001-7, 4-2-2001)
Sec. 34-122. - Definitions.

(a) Fire protection systems. Any fire alarm device or systems or fire extinguishing device or systems,
smoke control/smoke management device or systems, or their combination, which is designed and
installed for detecting, controlling, or extinguishing a fire, or otherwise alerting occupants or the Fire
Department, that a fire has occurred.
(Ord. No. 2001-7, 4-2-2001)
Sec. 34-123. - Periodic inspections, testing, and maintenance.

(a) Periodic inspections, testing, and maintenance of fire alarm signaling, fire suppression, and any other
fire protection systems, devices, and equipment shall be conducted in accordance with the appropriate
National Fire Protection Association's Code and Standards, as adopted and/or modified by this Code.
The required inspection, testing, and maintenance service shall be conducted by a sprinkler company
licensed by the State Fire Marshal Office, for all other systems a competent company or by an
approved owners representative at the intervals established by the National Fire Protection
Association's Code and Standards, as adopted and/or modified by this Code.
(b) Before testing any fire protection system which is connected to a central station or connected directly
to the fire communication center, notification shall be given to the central station or fire communications
before initiation of the tests.
(c) It shall be the responsibility of the owner of the protected property to see that the required periodic
inspection, testing, and maintenance of the system are conducted, as well as having the system
serviced whenever an unexplained activation of the system occurs or if the system is found to be
inoperative.
(Ord. No. 2001-7, 4-2-2001)
Sec. 34-124. - Inspection, testing, and maintenance services.

Inspecting, testing, and maintenance is required for all fire protection systems, devices, and equipment
installed within the Town of Ocean City. The inspection, testing, and maintenance service shall be
conducted by a sprinkler company licensed by the State Fire Marshal Office and for all other systems by a
competent company or by an approved owners representative at the intervals established by the applicable
National Fire Protection Association's Code and Standards, as adopted and/or modified by this Code. Upon
completion of the inspection, testing, and maintenance service, an approved certificate of inspection from
the fire protection company, which includes all the inspection, testing and maintenance criteria set forth in
the applicable NFPA code and Standards, shall be submitted to the Ocean City Fire Marshal Office.
Page 1
(Ord. No. 2001-7, 4-2-2001)
Sec. 34-125. - Certificate of inspection.

(a) A certificate of inspection from the appropriate National Fire Protection Code is required to be
forwarded to the Office of the Fire Marshal for the Town of Ocean City after each inspection/test is
conducted on all fire protection systems that are required to be inspected, tested, and/or maintained
by this article. The certificate of inspection must be submitted to the Office of the Fire Marshal within
30 days of the completion of the required inspection, testing and maintenance by a sprinkler company
licensed by the State Fire Marshal Office and for all other systems by a competent company or by an
approved owners representative. A certificate of inspection shall be completed after each periodic
inspection, testing, or maintenance and shall be maintained on site as part of the permanent systems
record.
(1) The fire protection company shall, within 30 calendar days of performing the inspection, test or
maintenance, submit to the Office of the Fire Marshal a completed inspection form.
(2) If the certification of inspection form for the fire protection system(s) has not been submitted within
30 days, the fire protection system(s) shall be classified as not being in compliance.
(Ord. No. 2001-7, 4-2-2001)
Sec. 34-126. - Submission of fees for certification for fire protection systems.
(a) At the completion of the required inspection, testing, or maintenance for each fire protection system,
the owner or an approved owners representative shall submit the appropriate fees as referred to in
section 34-128
(1) All fees required to be submitted under section 34-128 shall be submitted to the office of the Fire
Marshal within 60 calendar days of the date of the inspection, testing, or maintenance.
(2) If the owner or owners representative has failed to submit the required fee(s) within 60 days, they
shall be found in violation of this Code.
(Ord. No. 2001-7, 4-2-2001)
Sec. 34-127. - Code guidelines for inspection, testing, and maintenance.

Systems
Appropriate Code
(a) Fire Alarm Systems
NFPA 72 "National Fire Alarm Code"
(b) Sprinkler System(s)

(c) Fire Pumps
(d) Standpipe Systems
NFPA 25 "Standard for the Inspection, Testing, and Maintenance of

Water-Based Fire Protection Systems"
(e) Fire Suppression For

Kitchen Hoods
NFPA 96 "Standard for Ventilation Control and Fire Protection of

Commercial Cooking Operations"
(f) Generators
NFPA 110 "Standard for Emergency and Standby Power Systems"
Page 2
(g) Smoke Control Systems
NFPA 92A "Recommended Practice for Smoke-Control Systems"
(h) Smoke Management

Systems
NFPA 92B "Guide for Smoke Management Systems in Malls, Atria, and
Large Areas"
(Ord. No. 2001-7, 4-2-2001)
Sec. 34-128. - Certificate of inspection for fire protection systems fees.

The Mayor and City Council of Ocean City shall, by resolution, adopt a fee schedule for the review of
certificates of inspections submitted under the terms of this article.
(Ord. No. 2001-7, 4-2-2001)
Secs. 34-12934-200. - Reserved.
Page 3

5. NEW BUSINESS
E. Water and Wastewater Rate Study presented by Finance
Administrator
TOWN OF
TO:
THRU:
FROM:
RE:
DATE:
Agenda Item #
5E
Council Meeting
February 24, 2015

Martha Bennett, Finance Administration
Water and Wastewater Comprehensive Rate Study
February 10, 2015
ISSUE(S):
Water and Wastewater Rate Study for 2016-2020
SUMMARY:
This report presents the background, conclusions and

recommendations of the water and wastewater cost of service
study. The study is predicated on the use of a cash flow analysis
to support the pricing of utility services using a planning period
of 5 years (Fiscal Years 2016 - 2020).
FISCAL IMPACT:
Water Fund revenue can be reduced 13.7% in 2016 and 4.6% by

2020 due to less capital costs and debt. Wastewater revenue
projected increases are 4.4% in 2016 and 15.4% by 2020 to
fund needed capital projects, debt and operating costs.
RECOMMENDATION:
Hold a public hearing for proposed rate changes.

Financially Sound Town Government
ALTERNATIVES:
Leave at current rates and do not go forward with needed

maintenance and capital projects for water and wastewater
infrastructure improvements.
RESPONSIBLE STAFF:
Martha Bennett, Finance Administrator

Jim Parsons, Public Works Chief Deputy Director
Charlie Felin, Wastewater Superintendent
Bud Iman, Water Superintendent
Comprehensive Water and Wastewater Rate Study Executive
Summary. http://oceancitymd.gov/oc/departments/finance/
COORDINATED WITH:
ATTACHMENT(S):
Proposed Rates:
Current
2016
2017
2018
2019
2020
Water Fixture
Wastewater Fixture
Fixture Rate - Combined
2.60
8.45
11.05
1.60
8.80
10.40
1.60
8.95
10.55
1.60
9.85
10.95
1.60
9.45
11.05
1.60
9.60
11.20
Water Usage per 1000 gallons

Average Bill:
11 Fixtures & 6,000 gallons/month
Percentage change in total bill
3.40
3.70
3.90
4.00
4.00
4.20
$ 182.75
$ 181.00
(0.96%)
$ 186.25
2.90%
$ 191.35
2.74%
$ 193.55
1.15%
$ 198.80
2.71%
WATER & WASTEWATER RATE STUDY SUMMARY

A. Executive Summary
This report presents the background, conclusions and recommendations of a water and
wastewater cost of service study. The study was completed by updating the cost of service
financial model previously developed by Municipal Financial Services Group in 2005 and
updated in 2009. The study is predicated on the use of a cash flow analysis to support the pricing
of utility services using a planning period of 5 years (Fiscal Years 2016 - 2020).
1. Background
The water and wastewater financial model was updated/reviewed using the following
data/documents:
Actual revenue and expenses for Fiscal Years 2013 & 2014.
The FY 2015 and proposed FY 2016 operating budgets for Water and Wastewater.
The current capital improvement plan, reviewed by Whitman Requardt & Associates
(WR&A).
The current number of fixture counts and the amount of water sold over the past four
fiscal years.
The current cash balances within the Water and Wastewater Fund.
In addition to updating the model with the items listed above, the model took into account the
use of impact fees to fund growth-related capital costs. This was accomplished by examining
each individual capital improvement project to identify if the project or a portion of the
project is attributable to growth. As a result of this analysis, the Towns water and
wastewater user rates exclude growth related capital costs. All of the assumptions used in the
model (i.e. growth in fixtures, inflation of the expenses, etc.) were also reviewed to ensure
that they are still valid based upon review of historical data.
The following conclusions and recommendations were developed during the course of the
review/update of the financial model.
2. Operating and Maintenance (O&M) Costs
The water system has an estimated operating budget for FY 2015 of approximately $5.0
million; the wastewater department has an estimated operating budget for FY 2015 of
approximately $8.4 million for the same period. For purposes of this study it was assumed
that operating costs based on FY 2015 budget would increase at a rate of 1-2% annually.
3. Capital Costs
The water and wastewater systems both have adequate capacity to meet the Town of Ocean
Citys current and projected demands for these services. At this time no major additions or
expansions of either the water of wastewater utilities are anticipated. Engineering consultants
from Whitman & Requardt reviewed the Capital Improvement Plans (CIP) for both the
water and wastewater departments and provided recommendations as to the timing and
costing of some items in the CIPs and proposed other items for inclusion in the five year
plans. No major changes to the water or wastewater CIPs were recommended.
The total estimated expenditures in the water system CIP for FY 2016 FY2020 are
approximately $14.2 million; the wastewater system CIP for FY 2016-2020 estimates capital
expenditures of about $28.2 million.
4. Revenue Requirements
The total revenues required in FY 2016 for the water system (including operating costs, debt
service, capital costs, and reserves) are approximately $6.2 million. The wastewater
requirement for the same period totals approximately $13.6 million.
5. Other Income
The amount of other income from miscellaneous fees and charges other than rates is minimal
for both the water and wastewater departments. The total other income for the water system
in FY 2016 is $247,000 and the wastewater system estimates other income of approximately
$312,586. It was also assumed that some of the existing reserves in the wastewater system
would be drawn down to allow the Town to gradually increase wastewater rates instead of a
large rate increase immediately.
In addition, the wastewater system receives payment for providing collection and treatment
services to West Ocean City, which has a capacity of 1.0 million gallons per day reserved for
it. The agreement with Worcester County requires that West Ocean City pay 7.14% of capital
costs and operating costs based in their percentage of flows. In 2014, 10.5% of flows were
from West Ocean City.
6. Net Reserve Requirement
The net revenue requirement is simply the total revenue requirement minus any other income
from sources other than user charges. The net revenue needed from rates for the water
department in FY 2016 is approximately $151,402; the net revenue requirement of the
wastewater system for the same period is about $533,763.
7. Identification and Evaluation of Alternative Rate Designs
In the prior rate study, several alternative rates designs (e.g., declining block rates, unit cost
rates, etc.) were examined and compared them with the rate structures and the factors unique
to the Town of Ocean City (large swing in peak demands, types of customers, etc.).
For the water system, the commodity charge applies to all water consumption. This will
avoid penalizing low volume users while billing all water customers for their share of the
fixed capital costs.
Commercial fixtures are counted on an equivalent fixture basis. All customers of the
wastewater system are billed the same rate per equivalent fixture.
8. Conclusions and Recommendations
Based on our review of the data, the following conclusions are based on the rate model:
The Towns system provides all of the necessary cost information for the water and
wastewater systems to allow for a straightforward allocation of costs and calculation
of rates.
The Towns budgeting and accounting processes identify all of the costs associated
with providing water and wastewater services, including reasonable allocations of
Town overhead costs such as information technology, finance, and accounting.
The current cost allocation method used to determine the wastewater charges for
West Ocean City recovers the fixed capital costs associated with reserving 1.0 MGD
of capacity and providing for the collection and treatment of wastewater from West
Ocean City.
Both the water and wastewater systems have an operating reserve of 2% of the total
operating revenue requirement for their respective systems to provide for unusual of
unexpected operating costs and provide some flexibility in smoothing or leveling
out potential rate increase over time.
Both the water and wastewater systems have a repair, replacement and rehabilitation
(3R) reserve to provide funds for large cost items or projects of this nature without
corresponding large or sudden increases in rates.
The water systems flat rate fixture charge of $2.60 per fixture should be reduced to
$1.60 per fixture (based on an average of 11 fixtures per account, the average
quarterly charge would be $17.60).
The water system should increase the commodity charge from $3.40 per 1,000
gallons to $ 3.70 for all metered water consumption each quarter (for an average
water customer using 18,000 gallons a quarter, this would amount to about $ 66.60).
The wastewater systems quarterly flat rate fixture charge of $8.45 should be
increased $8.80 per fixture (based on an average of 11 fixtures per account, the
average quarterly charge would be $96.80).
Vacant lots should be charged a service availability fee of $56.10 on a quarterly basis.
The fee is a flat rate based on the capital related portion of the bill for an equivalent
dwelling unit (or 11 fixtures). This fee should be charged for both the water and
wastewater system (currently the front foot assessment only covers the wastewater
system). The water system portion of the charge is $1.60 ($1.60 x 11 fixtures). The
wastewater system portion of the charge is $38.50 ($3.50 x 11 fixtures).
In addition to the rate changes recommended above, the Town Council should
consider adopting the scheduled rates increases over the next five years for both the
water and wastewater departments. These increases are especially critical to the
wastewater system, where reserves are being drawn down to in 2017 for debt service
and will allow for a gradual increase to a level where rates are self-sufficient. In
addition, gradually increasing rates in small increments to cover rising costs will
hopefully avoid larger, more drastic rate increases in the future. The proposed rate
schedule for the period covering fiscal years 2016 2020 is presented below:
Proposed Rates:
Current
2016
2017
2018
2019
2020
Water Fixture
Wastewater Fixture
2.60
8.45
11.05
1.60
8.80
10.40
1.60
8.95
10.55
1.60
9.85
10.95
1.60
9.45
11.05
1.60
9.60
11.20
3.40
3.70
3.90
4.00
4.00
4.20
9. Comparisons
In order to compare the proposed water and sewer rates with similar communities the
following table was developed. It demonstrates the quarterly water and wastewater bill for
an average residential customer (someone using 6,000 gallons per month with 11 fixtures).
More detail is shown in Schedule 14 of Water and Sewer Rate Model.
Municipality
Ocean City, MD (current rates)
Ocean City, MD Proposed
Annapolis, MD
Berlin, MD
Newark, MD
Ocean Pines, MD
Salisbury, MD
Virginia Beach, VA
West Ocean City
Note
(2)
(2)
(2)
(2)
(2)
(2), (3)
(2)
(2)
Water
$ 89.80
84.20
100.48
56.10
148.50
110.50
53.82
103.11
N/A
Sewer
$ 92.95
96.80
98.53
175.35
175.50
120.50
133.38
92.43
121.50
Totals
$182.75
181.00
199.01
231.45
324.00
231.00
187.20
195.54
NOTES:
(1) - Based on Domestic Fixture Count of 11, and Metered Water Consumption of 6,000 Gal. per Month
(2) - Based on Average Metered Water Consumption of 6,000 Gal. per Month for a 3 Mo. /90 Day Period
(3) - Also includes EDU (Equivalent Dwelling Unit) of $54.00 per quarter
B. General Information
The Town of Ocean City provides potable water to a small year-round population of 7,800,
which swells to a summer weekend population of almost 300,000. This drastic shift in
population is evidenced by significant seasonal fluctuations in demand for water, which
varies from an average consumption of 5.9 MGD to a summer peak of almost three times that
quantity. Early in 1994, the Town also took control and ownership of the wastewater
treatment plant and wastewater collection system serving the Town; previously, the
wastewater system had been owned by Worcester County, and the Worcester County
Sanitary Commission. The wastewater system also has fluctuating seasonal demand, ranging
from less than 3 MGD of flow in the winter to more than 13 MGD on a max day in the
summer.
A summary of this usage data is provided as Schedule 3 of the Water and Wastewater Rate
Model in the appendix of this report, listing consumption data for the past five years in
thousands of gallons.
C. Operating and Maintenance Costs
The operating and maintenance costs for the water and wastewater utilities were developed
from the Town of Ocean Citys current budgets for fiscal year FY 2015 and proposed budget
for FY2016. These costs were then adjusted annually by an inflation factor of 1-2% to
estimate the budgeted costs for FY 2017 and beyond. The budgets are quite detailed and
comprehensive; in addition to basic costs such as salaries and benefits, supplies, heat and
light, routine maintenance, etc., detailed data is also provided for costs such as
interdepartmental costs such as information technology, accounting and finance, insurance
and capital items that may not be large enough to include in the Towns CIP such as minor
equipment and repairs.
1. Water System O & M Costs
Operating and maintenance (O&M) costs for the water system are categorized into five
groups administration expenses, distribution costs, costs attributable to operation of the
water plants, meter installation costs, and meter repair costs. The total estimated
administration budget for FY 2016 is nearly $979,948. The largest cost within this category
is for the operating transfer of interdepartmental costs of approximately $ 545,537 which
represents the reimbursement by the utility for support services provided by the Town (e.g.,
human resources, finance, and accounting). The water distribution cost component is
budgeted at nearly $ 1,289,469, with salaries and benefits making up over half of the budget
total.
The costs budgeted for the operation and maintenance of the Towns water plants make up
almost half of the total water system O&M budget. The three largest costs components
relating to the water plants are salaries, energy, and supplies. These three items total
approximately $1,674,380 out of a total budget of over $ 2,179,791 for plant O&M. The
meter installation budget of $137,522 is primarily made up of $ 75,000 for parts and salaries
of $43,793. The major costs elements in the meter repair budget of $ 293,241 are salaries and
benefits which constitute over half of the estimated costs in this category.
A detailed breakdown of the total estimated O&M costs of $4.8 million for the water
department is shown in Schedule 4 of Water and Sewer Rate Model, which is presented in
the Appendix to this report.
2. Wastewater System O&M Costs
The budgeted O&M costs for the wastewater system were developed within four groups
administration expenses, collection system costs, wastewater treatment plant costs, and the
expenses associated with laboratory services. The total administration costs of approximately
$1,455,845 has three major components the operating transfer for interdepartmental
expenses of $762,126 (as discussed above, this represents the reimbursement by the utility
for support services provided by the Town such as human resources, finance, and
accounting); salaries of nearly $449,702; and insurance expense of $95,094. Within the
collection system, over half of the budget of approximately $1,172,526 consists of salaries
and fringe benefits.
The operating and maintenance expenses associated with the wastewater treatment plant are
the largest expense group within the wastewater system, with a total budget of nearly $5.4
million. The largest cost components of this group are salaries and benefits which are more
than one third of the budget, energy expenses of $ 463,500, and supplies of more than $
638,000. The laboratory services budget of $331,972 primarily consists of salaries of
approximately $282,123 and supplies of $ 37,205.
A detailed breakdown of the total estimated O&M costs of $8.4 million for the wastewater
department is shown in Schedule 4 of Water and Sewer Rate Model, which is presented in
the Appendix to this report.
D. Capital Costs
The capital costs associated with the water and wastewater systems are separated into two
separate categories existing debt service and capital improvement projects. The Towns
CIP and capital budgets were reviewed by staff from Whitman & Requardt, Inc., and
incorporated into the master plan for each system and capital project section of this report.
The assumptions made as to the funding of future capital projects and purchases of fixed
assets, either with cash or through the issuance of debt are reported in this section.
1.
Existing Debt Service

The water system has outstanding debt with a total principal balance of approximately $3.2
million. This principal amount is scheduled to be repaid over the next 13 years with
scheduled interest payments totaling almost $ 532,000.
The wastewater system has over $27 million of outstanding bond issues at this time. This
principal amount is scheduled to be repaid over the next 18 years with scheduled interest
payments totaling almost $8.9 million.
The total existing debt service for both the water and wastewater systems are presented in
Schedule 8 of the Towns water and wastewater rate model shown in the appendix to this
report.
2.
Expected Capital Improvements

The expected capital improvements were derived from the Town of Ocean Citys CIP for the
water and wastewater departments. The engineering consultant members of our project team
from Whitman Requardt Engineers reviewed the water and wastewater CIPs with a focus on
four areas the timing of the items as scheduled on the COP, the adequacy of the costs listed
in the CIP, any recommended additions or deletions from the current CIP, and any regulatory
issues that may warrant additional consideration.
As a result of their review of the water department CIP, Whitman Requardt had the following
recommendations:
Water Main Upgrades
Raw Water Main to 66th St
Treatment Plant Improvements
66th Street Water Plant - land
66th Street Water Plant - design & construction
Conversion To Automatic Water Meter Reading
1st Street Water Tower
Total Water Fund Capital Improvements
1,075,000
845,000
970,000
1,250,000
5,500,000
600,000
4,000,000
$ 14,240,000
As a result of their review of the wastewater department CIP, Whitman Requardt had the
following recommendations:
Wastewater Mains
4th Secondary Clarifier & Improvements
Elevate Incoming Electrical Gear - treatment plant
Ocean outfall lining under beach dune line
Replace Pista Grit Unit
Oxygen building SCADA upgrades & repairs
Primary Influent Building MCCA - Replacements
28th Street pumping station
Chloring contact chamber expansion
Total Wastewater Capital Improvements
15,000,000
6,000,000
1,251,450
1,166,000
400,000
600,000
425,000
1,825,000
1,500,000
$ 28,167,450
The water and wastewater system CIPs are presented in Schedule 7 of the Towns water and
wastewater rate model in the appendix to this report.
3. Cash Purchases of Assets
For purposes of this study, it was assumed that a portion of assets identified in both the water
and wastewater departments CIPs covering the current fiscal year and the next will be
funded with cash outlays. The funds would come either from rates or cash on hand or in
reserves for the water and wastewater departments and is found on Schedule 7A.
4. Anticipated Debt Service

At the time of this study, new debt financing for capital projects is anticipated for both the
water and wastewater utilities over the next few years. For rate modeling purposes, it was
estimated that certain items in the water and waste water CIPs would be funded by issuing
bonds during the period from FY 2016 FY 2020.
The estimates made regarding the funding of the water and wastewater capital projects with
cash outlays and the issuance of debt are presented in Schedule 15B of the water and
wastewater rate model shown in the appendix to this report.
E. Revenue Requirements for Water & Wastewater Rates
The revenue requirements for the water and wastewater systems are simply the total revenues
needed by each utility to pay for the total amount of O&M costs, capital costs, plus any
reserves established. The cash needed to meet the revenue requirements can come from a
variety of sources, such as permits, hook-up fees and other miscellaneous charges. This
section summarizes the various cost components of the water and wastewater revenue
requirements.
1. Water System Revenue Requirement
The revenue requirement for the water department is split into two major components
operating costs and capital costs, as discussed in Sections C and D (above) of this report. The
total estimated operating costs of approximately $4.4 million for the water system consist of
the costs for administration, distribution, water plants, meter installation and meter repairs. In
addition, the operating reserve allows for unusual or unexpected one-time charges that may
arise over the year, or can buffer the impact of lower than anticipated water usage during an
excessively wet or dry year. For purposes of this study, an operating reserve base of 2% of
the total budget operating costs is included, which amounts to approximately $97,500.
The capital costs component of the water departments revenue requirement has three
elements capital expenditures to be funded with cash, existing debt service, and projected
debt service for future capital expenditures not funded with cash. For purposes of this study,
it was assumed that new debt would be issued to pay for approximately $4 million in capital
expenditures during fiscal year 2016 along with $6.7 million of the capital projects planned
for fiscal year 2020. The total payments for the existing debt service are almost $663,392 for
FY2016.
In addition, the Repair, Replacement & Rehabilitation (3R) Fund is a reserve to assist in
paying for major projects that were capital related, and to help alleviate possible spikes in
the revenue requirement when major projects are required. Typically, utilities with the 3R
reserve use a percentage of the net book value of their systems assets. For purposes of this
study, the reserve was calculated at one percent of the water systems net book value of
approximately $15 million, or about $150,000. This calculation is shown in Schedule 9 of the
appendix to this report.
The FY2016 total revenue requirement for the water department therefore consists of total
estimated operating costs of $4.4 million and capital costs of approximately $1.8 million, for
a combined total revenue requirement of $6.2 million. The water systems revenue
requirement calculations are presented as Schedule 10 in the appendix to this report.
2.
Wastewater System Revenue Requirement

The wastewater system revenue requirement is also split into two components operating
costs and capital costs. The operating cost component totaling approximately $7.8 million
consists of the budget costs for administration, the collection system, and the wastewater
treatment plant and laboratory services (as discussed in Section C). As with the water system,
an operating reserve is charged to allow for unexpected or unusual expenses. The operating
reserve of 2% adds approximately $168,500 to the total operating revenue requirement for
the wastewater system.
The capital cost component of the wastewater departments revenue requirement also has
three elements capital expenditures to be funded with cash, existing debt service, and
projected debt service for future capital expenditures not funded with cash. For purposes of
this study, it was again assumed that new debt would be issued to pay for approximately
$24.6 million in capital expenditures during fiscal years 2016 and 2020. The total payments
for the existing debt service are about $3.1 million for FY2016.
As with the water system, a Repair, Replacement & Rehabilitation (3R) Fund assists in
paying for major projects that are capital related, and to help alleviate possible spikes in the
revenue requirement when major projects are required. As stated above, utilities with a 3R
reserve use a percentage of the net book value of their systems assets. The reserve for the
wastewater department was calculated at one percent of the water systems net book value of
approximately $53.3 million, or about $533,700. This calculation is shown in Schedule 9 of
the appendix to this report.
The FY2016 total revenue requirement for the wastewater department therefore consists of
total estimated operating costs of $7.8 million and capital costs of approximately $4.9
million, for a combined total revenue requirement of $12.7 million. The water systems
revenue requirement calculations are presented as Schedule 10 in the appendix to this report.
F. Other Income
In order to determine the amount of revenues required from user charges it is necessary to
estimate the level of income that the water and wastewater utilities will receive from other
sources, such as interest income, permits and fees, and miscellaneous other charges to water
and wastewater customers.
1. Other Income
The water department has limited sources of revenues other than the user fees currently
charged. Additional revenues are anticipated from interest on delinquent accounts in the
amount of $4,000 sales of materials and services of $30,000 and water connections services
(which are discussed below) of $165,000. The total estimated income from sources other
than water rates for FY2016 is $216,255.
The wastewater department has several additional sources of income other than user fees.
The largest revenue sources are plumbing permits which provide about $66,000 and lab fees
which generate about $90,450. Total revenues from sources other than wastewater rates are
estimated at $272,194 for FY 2016.
The total other income for the water and wastewater departments is summarized in Schedule
6 of the Towns water and wastewater rate model in the appendix to this report.
2. Connection Charges
One of the revenue sources other than user fees for the water and wastewater utilities is
connection charges. These fees are based on the estimated costs of the Town to install a
water meter and hook-up to the water system or connect to wastewater system. The charge
for installation of a water meter varies depending on the cost to install the meter, ranging
from $1,500-$2,000 for a 1 meter to $25,000 to $30,000 for a 10 meter. Connection
charges for the wastewater system can range from $4,500 to $8,500 depending on the size of
the service connection and street width and are reviewed on a regular basis to ensure they
adequately reflect the cost of the service provided.
3. Impact Fees
The Town of Ocean City uses impact fees or system development charges which have been
are billed to new customers since 2005. Impact fees are charged to help pay for the costs
associated with expansion of the utilitys capacity. As of June 30, 2014, debt service for
expansion of water system capacity exceeded impact fees collected since 2005 by
$1,143,387. Debt service for expansion of wastewater capacity exceeded impact fees
collected since 2005 by $1,406,476.
4. Costs Related to Wastewater Service for West Ocean City
The wastewater treatment plant in Ocean City provides sewage treatment for the sewage
flows transported to it from West Ocean City, which is outside the corporate limits of Ocean
City. The sewage is transported across the bay via a dedicated pipeline, and then flows
through Ocean Citys collector system to the plant at 65th street. In a typical situation, Ocean
city would charge West Ocean City a sewer rate higher than the rate that was charged to
residents of Ocean City. The use of higher rates for service outside the boundaries of a
municipal utilitys service area is a fairly typical method to reimburse the utility for financial
risks taken (e.g., the responsibility for debt issued to build capacity for use outside its
corporate limits) and for the use of the utilitys credit.
The agreement between the Town of Ocean City and Worcester County transferring the
assets and liabilities of Sanitary District #1 (basically, the Ocean City Treatment Plant) to the
Town of Ocean City requires that Ocean City charge Worcester County for sewer service
provided to West Ocean City on the same basis as sewer service is charged in Ocean City.
That is, the Town of Ocean City is precluded from charge the County any profit or surcharge
for service provided to West Ocean City.
The basic principal of utility rate-making is to identify or allocate costs to those customers,
customer groups or customer classes who are responsible for the costs which are incurred.
This approach has been followed in developing rates within Ocean City.
For rate making purposes, West Ocean City is one customer; the bill is sent by Ocean City to
Worcester County, which then bills the residents of West Ocean City. The calculation of the
amount that is charged for service to West Ocean City is exactly the same as that used in
Ocean City, and includes no profit or surcharge.
Capital costs are allocated on the basis of the higher of capacity used or reserved.
Worcester County requested that 1.0 MGD of capacity be reserved for West Ocean
City; this amount of capacity is sufficient to serve existing residents of West Ocean
City, and accommodate the growth that is expected in West Ocean City. This amount
of capacity represents approximately 7.14% of the total capacity of the Ocean City
Treatment plant, so 7.14% of the annualized capital costs for the treatment plan
(equal to approximately $210,800 in Fiscal Year 2015) are charged to West Ocean
City.
Operating costs are allocated based on the quantity of sewage treated from West
Ocean city as a proportion of the total flow treated at the plant. West Ocean Citys
flows, on an annual basis, is approximately 10-11% of the total flow to the plant,
resulting in an allocation of $633,787 in operating costs to West Ocean City for Fiscal
Year 2015.
The total cost of treating sewage from West Ocean City includes both the costs of
building the plant (reflected principally as annual debt service on bonds for which
Ocean City is now and will be responsible) and the costs of operating the plant.
The allocation of costs to West Ocean City is presented in Schedule 11 of the Towns water
and wastewater rate model in the appendix to this report.
5. Availability Charge for Vacant Lots
The capital costs of the water and sewer system are fixed; that is when capacity is
constructed, the costs related to paying for the capacity must be paid by Ocean City, whether
or not the capacity is currently being used. The most obvious example of this situation is the
construction of water and sewer systems to serve seasonal customers, who use the capacity
on only an irregular basis, or for part of the year.
A less obvious cost but just as real for Ocean City is the building of capacity for vacant lots;
Ocean City must have the capacity to serve these lots, but does not know when construction
will actually occur on the lots. It is equitable and fair to charge the owners of these lots for
the capital costs of developing and having available the system capacity to serve these lots. It
is not appropriate to charge vacant lots for any of the operating costs of the water or sewer
systems, because the vacant lots are not responsible for, nor do they benefit from, these costs.
If a lot/parcel will not receive water or sewer service (e.g., a parking lot), it is not appropriate
to charge an availability fee to the property. Likewise, if the City were to exhaust its capacity
for additional customers, it could not reasonably impose an availability fee for vacant lots
unless and until it developed additional capacity.
The cost to Ocean City of having water and sewer service available to a vacant lot on the
assumption that the vacant lot will be the site of an equivalent Dwelling Unit (EDU), is the
approximation of the amount of demand that a single family dwelling can place on a water or
sewer system. This calculation is as follows:
FY 2016 Service Availability Charge, per Quarter:

Water: $1.60/fixture x 11 fixtures =
(average number of fixtures per EDU)
Sewer: Less than half of sewer revenue requirements are
capital-related, or $3.50; $3.50 x 11 fixtures =
Total Quarterly Service Availability Charge
$17.60
38.50
$56.10
If the City knows that a vacant lot is zoned for (or will be used for) multiple units, the charge
should be for multiple EDUs; if a property owner can demonstrate that a lot will be used for
some purpose with less demand than an EDU such as a parking lot, we presume that the lot
owner will inform the City.
There are 485 vacant lots which are charged the above service availability charge. The total
estimated revenues from the service availability charge for the water system would be about
$34,000. For the wastewater system, the total estimated revenues from the service
availability charge would be about $74,000.
G. Net Rate Revenue Requirement
The net revenue requirement is simply the total revenue requirement (as discussed in
Schedule 10 of this report) minus all income from sources other than user charges/rates. For
rate setting purposes, the net revenue requirement was split into two separate components
fixed charges and commodity charges. Fixed charges recover a preset amount of costs and
provide a steady stream of revenues each quarter. Commodity charges are a fee based on
actual metered water usage, usually as a cost per thousand gallons.
1. Allocation of Revenue Requirement: Fixed vs. Commodity
Fixed costs are typically those expenses which do not change based on the volume of water
or wastewater used or treated. To the extent possible, these fees are typically recovered
through fixed or base charges that remain constant over the course of a year. Variable costs
are typically recovered by way of a commodity charge based on metered consumption. There
are several factors to consider when allocating the net revenue requirement between two
components. These include the utilitys ability to identify and separate these costs, the
amount of time and effort to make the allocations, and the impact it has on rates and they
type of rates being considered.
As a starting point, the revenue requirement was allocated between capital and opening costs
for both the water and wastewater systems. This was done for two reasons first, the
departmental budget made this allocation straightforward and uncomplicated; second, the
allocation would be easy from an administrative standpoint to incorporate into a rate setting
and billing system.
H.
Identification and Evaluation of Alternative Rate Designs
The Town of Ocean City currently charges water customers a minimum charge based on
number of fixtures, plus a charge per thousand gallons for all water consumption. For
residential customer with 11 fixtures, the current charges each quarter are a minimum of
$28.60 plus $3.40 per thousand gallons for any usage. Wastewater customers are billed a flat
rate each quarter based on the number of fixtures in their home or business. The current
charge for a residential customer each quarter is $8.45 per fixture, or a charge of $92.95.
In identifying the rate structure most appropriate for the Town of Ocean City, a variety of
rate designs employed by various jurisdictions were studied the prior rate studies. For the
study, they were:
Declining Block Rate (sometimes referred to as a base/extra capacity rate) is the
classic engineering approach to rate design, predicated on the assumption that the
base load of a water system is what allows the system to be sized for optimum
efficiency, and that the incremental costs related to building and operating extra
capacity is what should be charged to larger users with relatively even peak demands.
This approach has lost favor in recent years, because it effectively amounts to a
volume discount, giving incentives to use more water.
Unit Cost Rate the simplest of rate designs, constructed by taking the total annual
O&M costs and capital costs of the utility, and by dividing by the quantity of water
used or number of units served. All units are charged at the same price.
Base Plus Commodity Rate this design identifies the fixed costs to be recovered
through rates and calculates the monthly cost per customer. The O&M costs are
recovered based on total estimated water to be consumed to determine a unit cost per
1,000 gallons of water. This usage charge is then added to the monthly base charge to
determine the total customer bill for the period.
Ascending Block Rate or Conservation Rate typically charges an increasing unit
costs on the next unit of consumption. In other words, the unit cost per gallon of
water increases as consumption increases.
Lifeline Rates which give targeted customers a minimum quantity of water at a
minimum price, with water used above this quantity billed at a higher rate. This
approach is revenue neutral; that is, the non-lifeline rates have to be increased
sufficiently to offset the revenues lost by water sold at the lifeline rates. If lifeline
rates are too low, or if a lifeline discount is given to too many customers, the effect is
to render the discount meaningless.
Separating the rate into two components, a fixed cost (which typically included
administrative costs, fixed annual costs, debt service and capital costs) and a variable
cost (which consists of those costs which vary with water and wastewater treated,
such as energy, chemicals, etc.).
Isolating the costs (both capital and operating) of compliance with environmental
regulations, and showing this costs as an environmental surcharge on the customer
bill; this approach illustrates to customers just what environmental requirements

translate into in terms of costs, and just what the utility is spending for such purposes.
Seasonal rates, which are employed as a form of conservation rates to hold down
consumption during peak usage months (typically, the summertime).
In evaluating these alternatives to determine the most appropriate rate design, considerable
attention was given to key factors that are somewhat unique to Ocean City. The first factor is
the dramatic change in the Towns population from a year-round population of
approximately 7,800 to almost 300,000 during the peak summer season. The second factor is
that to meet the demands placed on both the water and wastewater systems during the peak
season, the Towns fixed costs are relatively high due to the amount of capacity it must have
available for peak demands, and the related financial impacts to the fixed portions of the
operating and maintenance costs caused by the large shifts in water and wastewater
consumption.
Only one water treatment facility operates during low water demand months while all three
operate in the summer months. Therefore, for the water fund, it is possible to use the base
plus commodity rate design which assigns fixed and capital costs to the base or fixture
charge and variable costs to the amount of water flow. A usage charge for all gallons of water
consumed encourages conservation and installation of low flow plumbing fixtures
As there is only one wastewater treatment plant which handles year-round preliminary
treatment including screening and grit removal, primary sedimentation, secondary treatment
using a high purity oxygen activated sludge process, and disinfection with chlorine gas
followed by dechlorination with sulfur dioxide gas and solids handling processes include
gravity thickening for primary sludge, dissolved air flotation of waste activated sludge,
sludge dewatering of blended sludge using rotary presses, and an EnVessel Pasteurization
Process which produces biosolids meeting Class A levels; virtually all costs are fixed except
energy and chemicals. Due to amount of fixed costs required for the wastewater plant to be
available to meet 14 mgd peak summer demands and fully operate year round, the unit cost
rate is applicable for wastewater treatment. The fixture unit is appropriate because it fairly
allocates costs between all users, whether a single family home or condominium unit or a
large hotel.
I.
Conclusions and Recommendations
The first part of this section presents the conclusions developed based on the review of the
Town of Ocean Citys water and wastewater utilities. The next part discusses
recommendations for changes or modifications within the water and wastewater departments,
including recommended rate structures and user fees. Based on prior year and budgeted costs
data and the capital improvement plan, the following is concluded and recommended:
The Towns accounting system provides all of the necessary costs information for the
water and wastewater systems to allow for a straightforward allocation of costs and
calculation of rates.
The Towns budgeting and accounting processes identify all of the costs associated
with providing water and wastewater services, including reasonable allocations of
Town overhead costs such as management, human resources, billing and accounting.
The current cost allocation method used to determine the wastewater charges for
West Ocean City recovers the fixed capital costs associated with reserving 1.0 MGD
of capacity and providing for the collection and treatment of wastewater from West
Ocean City.
Both the water and wastewater systems should continue an operating reserve of 2% of
the total operating revenue requirement for their respective systems to provide for
unusual or unexpected operating costs and provide some flexibility in smoothing or
leveling out potential rate increases over time.
Both the water and wastewater systems should continue a repair, replacement and
rehabilitation (3R) reserve to provide funds for large cost items or projects of this
nature without corresponding large or sudden increases in rates.
The water systems minimum charge a quarterly fixed charge of $1.60 per fixture
with no usage included (based on an average of 11 fixtures per account, the quarterly
minimum charge would be $17.60.
The water system should charge a commodity charge of $3.70 per 1,000 gallons for
all metered water consumption each quarter (for a water customer using 8,000 gallons
a quarter, this would amount to about $66.60.
The quarterly flat rate per fixture for wastewater should be established at $8.80 per
fixture (based on an average of 11 fixtures per account, the average quarterly charge
would be $96.80.
Impact fees should continue to be collected to pay for debt service on capital projects
that have expanded or will expand water and wastewater treatment capacity.
Vacant lots should be charged a service availability fee of $ 56.10 on a quarterly
basis. The fee is a flat rate based on the capital related portion of the bill for an
equivalent dwelling unit (or 11 fixtures). The water system portion of the charge is
$17.60 ($1.60 x 11 fixtures). The wastewater system portion of the charge is
$ 38.50 ($3.50 x 11 fixtures).
In addition to the rate changes recommended above, the Town Council should
consider adopting a series of scheduled rate increases over the next five years for both
the water and wastewater departments. These increases are especially critical to the
wastewater system, where reserves are being drawn down to allow for a gradual
increase to a level where rates are self-sufficient. In addition, gradually increasing
rates in small increments to cover rising costs will hopefully avoid larger, more
drastic rate increases in the future.
The following is the proposed rate schedule for the period covering fiscal years
2016 2020:
Current
Proposed Rates:
2016
2017
2018
2019
2020
Water Fixture
Wastewater Fixture
2.60
8.45
11.05
1.60
8.80
10.40
1.60
8.95
10.55
1.60
9.85
10.95
1.60
9.45
11.05
1.60
9.60
11.20

Average Bill:
11 Fixtures & 6,000 gallons/month
Percentage change in total bill
3.40
3.70
3.90
4.00
4.00
4.20
$ 182.75
$ 181.00
(0.96%)
$ 186.25
2.90%
$ 191.35
2.74%
$ 193.55
1.15%
$ 198.80
2.71%

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MAYORANDCITYCOUNCIL

WORK SESSION -MAYOR AND CITY COUNCIL

NOTICE OF CLOSED SESSION OF MAYOR & CITY COUNCIL OF OCEAN CITY

Tuesday, February 24, 2015 10:00 a.m.

AUTHORITY: State Government Article: Section 10-508(a) Annotated Code of Maryland

REPORT OF CLOSED SESSION

WORK SESSION -MAYOR AND CITY COUNCIL

WORK SESSION -MAYOR AND CITY COUNCIL

The White Marlin Capital of the World

February 24, 2015

The Honorable Mayor, Council President and Members of Council

Report on Ocean City Center for the Arts

Rina Thaler, Executive Director, and Marian Bickerstaff, Board

1) 2013 Annual Report

Making An Impact in the Community

Grand opening CelebrationMarch 1, 2013

2013 Annual Campaign Donors

Drs. Phyllis & Leonard Jaffe

Herb and Judy Schoellkopf

LEAVE A LASTING IMPRESSION!

Atlantic Dental Cosmetic & Family Dentistry

Restaurant Reception Donors

Something Magical Happens Here

BROWN BOX THEATRE NINA VARIATIONS

2013 SCHOLARSHIP WINNER,

2013 KEY INCOME & EXPENSES COMPONENTS

2013 STRATEGIC GOAL ACHIEVEMENTS

Building Community Through Art

16,909 visitors in 2014 (30,000 since new building)

September 17-18: Sand Castle Home Tour

WORK SESSION -MAYOR AND CITY COUNCIL

The White Marlin Capital of the World

February 24, 2015

The Honorable Mayor, Council President and Members of Council

Request approval for the OC Dolphin Plaza

In 2014, the City Council approved Ocean City Development

$30,000 through OCDC fundraising and OCDC Public Art Fund.

Approve project as presented.

Chris Trimper, Chair, OCDC Public Art Committee

Hal Adkins, Director of Public Works

Plaza design plan with dolphin sculpture

EXISTING MEMORIAL TREE TO REMAIN

REMOVE AND RELOCATE EXISTING SIGNAGE

REMOVE EXISTING CONCRETE CURB

EXISTING STEPS TO BE REMOVED

FACE BRICK TYPE 2

FACE BRICK TYPE 1

BRICK PAVERS- SIZES VARY.

DUR-O-WALL @ 16" O.C.

6" COMPACTED STONE

3205 Randall Parkway, Suite 211

FACE BRICK TYPE 2

2" BEDDING SAND

309 S Governors Ave

CONDUIT FOR LIGHTING

MASONRY WALL DETAILS

62ND STREET & COASTAL

SITE LIGHTING - MOUNTED

SEE STRUCTURAL DRAWINGS

GROUND MOUNTED SITE

SHA - RIGHT OF WAY/

STAMPED CONCRETE SIDEWALK

RELOCATE EXISTING SHA SPEED LIMIT

DRAWN BY: WES