Chapter 12: Fiscal Capacity and Capital Improvement Plan

Purpose

Ogunquit is the newest town in Maine.

Ogunquit is the newest town in Maine and has established a strong fiscal discipline since its incorporation in 1980. Fiscal capacity deter- mines how the Town can continue to grow while meeting the needs of its residents, businesses, and visitors. This chapter will provide the current status of the financial condition of Ogunquit and analyzes its ability to develop and grow while maintaining the charm that has attracted so many.

Overview

The population of Ogunquit has fluctuated dramatically since its incorporation, from under 900 to almost 1,600, but the large seasonal influx of tourists—with estimates of 15-30,000 daily visitors—has a major impact on the need for services. For example, additional police presence is required as well as a large lifeguard force. Many Town businesses are only open during the tourist season: hotels and inns are typically fully booked throughout the summer; shops open to serve tourists; and restaurants open for the summer or expand hours to meet the massive demand. That influx drives a large increase in seasonal employment, putting ever greater strain on workforce housing supply. Traffic, especially on Route 1 and Shore Road, slows to a crawl, exacerbated by the many pedestrians, and parking lots fill up early in the day, increasing the need for enforcement. The tourist business provides many benefits as well as challenges for the Town. Some locally owned businesses provide services for residents year-round. Demand for property in our charming town has raised property values far above the Maine average. Parking lot fees provide significant revenue to help pay for municipal services.

Ogunquit continues to be an LGBTQ+ friendly community. The large senior community, with the highest median age in Maine, encourages retirement here.

Population Growth

The 2020 census showed a large increase in full-time residents, from 892 in 2010 to 1,577. There are several factors behind that increase. Retirees continue to move to Ogunquit, often converting summer rentals to year- round homes. The Town’s proximity to Portland, Bos- ton, Portsmouth and the scenic Maine coastline makes it a desirable location. Ogunquit continues to be an LGBTQ+ friendly community. The large senior commu- nity, with the highest median age in Maine, encourages re- Main Beach Photo by David Sullivan tirement here. The increase in remote work opportunities has also contributed to Ogunquit’s growing permanent population. Currently, only 14% of residents live in rented accommodations,, far below the state average of 27%. There are only 39 students attending school, and 29 of them live in rented housing units. Population projections estimate 1775 residents by 2040, doubling the 2010 census count. While growth is limited by the town’s small area of 4½ square miles, that growth will drive the need for more homes across the price spectrum, from rentals to workforce and affordable housing to senior living to luxury homes. That growth, while providing more tax revenue, will put strains on the Town resources of all types. For example, voters have rejected the addition of a Recreation Director and a Natural Resources Coordinator/As- sistant Code Enforcement Officer, but Town management be- lieves that those positions are still needed, as well as addi- tional firefighters.

Real Estate and Assessed Values

Currently, only 14% of residents live in rented accommodations, far below the state average of 27%. There are only 41 students attending school, and 29 of them live in rented housing units. Population projections esti- mate 1,775 residents by 2024, dou- bling the 2010 census count.

Ogunquit was completely reassessed to 100% of market value in 2023, bringing the total assessed value from $1,294,065,048 in 2010 to $2,029,113,530 in 2023. The median home value as of July 2023 was

ASSESSMENT

$615,233, with and average value of $725,220. 60% of Town homes are vacant off-season, with owners headed elsewhere. The tax mil rate for 2023 was 6.32%—among the lowest in Maine—and tax revenues were $12,823,997. rentals mostly unused over each winter.

Municipal Budgets and Independent Financial Audits

The Ogunquit annual budget cycle runs from July 1 through June 30, with new budgets approved at the annual Town Meeting in June. The budget process begins with a thorough review of the current year and projections by each depart- ment for the coming year. The Town Manager presents that initial document, which is then thoroughly reviewed, line item by line item, by the elected Budget Review Committee and the Select Board, with further input from the Town Manager, Town Treasurer, and de- partment heads as necessary. Capital improvements are prioritized, including an assessment of current debt maturity. Every attempt is made to keep cost increases at a minimum while achieving the Town’s goals. The budget is finalized early in the year, and public hearings are held throughout the Spring. Budgets are approved by department, by committee, by capital request, and miscellaneous items. The Town has historically relied on the issuance of debt to fund capital items but has recently developed a Reserve Account policy to fund other expenditures, such as large maintenance and repair costs, using debt for larger capital items. The Town has a State cap on debt of 7.5% of the last full State valuation, which was $151,900,000 in 2023. The 2023 year end debt for Ogunquit was $8,304,151, with authorized unissued bond items of $13,460,500—driven mostly by the construction of a new town hall/police station and the modernizing of the community center, as detailed in the Public Facilities inventory.

The Ogunquit annual budget cycle runs from July 1 through June 30, with new budgets approved at the annual Town Meeting in June.

The 2023 approved budget was $10,177,521.43.

The 2023 approved budget was $10,177,521.43 (plus school budget costs of $5731, 654.81 and county fees of $817,146.01). The 2023 actuals were $9,878,803.69 (plus school costs and county fees). As mentioned above, only 41 Ogunquit residents attend school in the Wells/Ogunquit School District. The approved 2024 budget is $10,926,179, comprised of $9,551,132 operational, $1,189,047 in existing debt service, $153,000 in FY2024 capital funds, and $33,000 in annual reserve funding. Bonding of $12,533,000 has been approved but not yet bonded. The revenue budget was $4,627,450, including $533,000 of unas- signed funds ($200,000 to offset taxation and $153,000 to cover capital items). The FY2024 Municipal appropriation from taxation is $6,298,729, an increase of 2.75% from FY2023. In November, residents approved a transfer of $456,000 from the Unassigned Fund to reserves to strengthen capital planning, and an additional bonding of $185,000 for capital items.

TAX COLLECTION

ANNUAL REVENUE AND EXPENSES

	2019	2020	2021	2022	2023
Gov. Revenue	$4,478,683	$4,337,794	$5,743,802	$4,534,233	$4,835,566
Tax Collection	$10,751,905	$10,751,905	$11,457,320	$11,491,208	$12,240,507
Total	$15,230,588	$15,089,699	$17,201,122	$16,025,441	$17,076,073
Expenditures	$8,357,034	$8,530,839	$9,090,349	$9,266,630	$9,878,803
Transfers	$6,117,488	$6,237,495	$6,289,891	$6,496,831	$6,581,801
Total	$14,474,522	$14,768,334	$15,380,240	15,763,461	$16,460,604

The Town is audited annually, and the results are posted on the Town website. The audit analysis provides three components: government-wide financial statement (which provide a broad view of the Town’s op- erations), fund financial statements (accounts segregated for specific purposes), and notes to those state- ments. The most recent published audit, conducted by RHR Smith & Company for the fiscal year 2022, found no instances of noncompliance with laws, regulations, contract and grant agreements which could have an effect on determination of compliance.

Capital Improvement Plan and Long-Term Financing Mechanisms

The Town has a Capital Asset policy dated 2002 and a Capital Improvement Planning pol- icy dated 2017, with a new policy recently re- leased. Ogunquit is updating all its financial policies in order to obtain a national rating by Standard and Poor and/or Moody’s for use in debt issuance for the recently approved mu- nicipal campus plan.

The Town’s Capital Improvement Plan includes a list of all capital improvements proposed in the next five fiscal years, some of which will be funded through indebtedness. The Town is also working to set aside reserves for acquisi- tion, repair, or maintenance of various capital items, such as vehicles and equipment.

The Town evaluates capital spending during each annual budget cycle, considering the im- pact on tax rates, the unassigned fund balance and debt service levels against operational and capital needs. Department Capital Budget re- quests must be renewed and prioritized every year. All Capital Budget requests are agreed by the Select Board before being submitted for voter approval. The Budget Review Committee collaborates and advises the Town, and its vote is shown on each warrant article. Each re-
quest is included on the annual Town Meeting warrant as a separate article with a description of financing and each must be approved by voters.

Ogunquit also has a State and Federal Funds Management Policy to provide guidelines for applying for and managing grants when available. Grants have been used recently to help fund storm damage repairs on the Marginal Way. Recent grants have been approved for replacing the Perkins Cove Footbridge as well as storm repairs to the Main Beach Parking Lot.

The Town participates in the Climate Ready Coast cohort of SMPDC to help plan a Regional Coastal Resili- ence Plan. Ogunquit also partners with its neighbors to develop a Southern Maine Energy Navigator Pilot to help roll out a home weatherization and electrification program, as well as working to develop and action plan to address stormwater runoff. Ogunquit and Wells police and fire departments work cooper- atively to minimize response times. In addition, Ogunquit has worked closely with the York Land Trust and Great Works Regional Land Trust to protect more forest and open space at the best costs for Town resi- dents.

Ogunquit’s total outstanding debt, as of June 30, 2023, is at $8,304,151 from projects dating back to 2003. The table below projects total debt service by year. The next table details approved debt that has

not yet been bonded. The Town is responsible for its proportionate share of the County and School Dis- trict’s debt. As of June 30, 2022, the Town’s share of debt was approximately $5,638,955.

Conclusion

While the Town’s small size and pop- ulation limit its tax revenue, town parking lots, providing convenient ac- cess to its many charms, provide a significant revenue boost.

Ogunquit has a history of conservative financial manage- ment. While the Town’s small size and population limit its tax revenue, town parking lots, providing convenient ac- cess to its many attractions, provide a significant revenue boost. The additional revenue helps fund year-round, full- time police and fire departments. That revenue is poten- tially at risk due to sea level rise (which also impacts the Ogunquit Sewer District, a separate quasi-municipal entity, but those impacts will affect Ogunquit resi- dents). With the much-anticipated municipal campus project approved by the voters and getting ready to start, Ogunquit looks toward the future in strong financial shape.

Goals, Policies and Strategies

Goal

To provide the most effective possible municipal government at the best possible cost.

Policies:

Tofinance existing and future facilities and services in the most cost-effective
Tocontinue to explore grants and gifts available to help fund capital investments within the
Tocontinue to control Ogunquit’s tax burden.

Strategies:

Priority: 1-5 with 1 being the highest priority.

Description	Priority	Responsibility
Develop long-term capital improvement plan, identifying all known projects, with costs and timetables.	1	Town Manager
Assess the financial impact of sea level rise and corre- sponding reduced income from parking lots on taxes.	2	Town Treasurer
Explore opportunities to work with neighboring communi- ties to plan for and finance shared or adjacent capital im- provements to increase cost savings and efficiencies.	3	Town Treasurer
Continue to identify public/private funding opportunities.	4	Town Treasurer
Identify opportunities for municipal employees to develop revenue streams, especially for services to tourists.	5	Town Manager

Town of Ogunquit