CCW Minutes and Attachments 1-2 (Revised Motion 08-24-2018)

COUNCIL COMMITTEE OF THE WHOLE The Council Committee of the Whole met on July 24, 2018 at 6:02 p.m., with Council President Slavin presiding. Members of Council present were Mr. Sudler, Mr. Neil, Mr. Lewis, Mr. Cole, Mr. Polce, and Mr. Hare. Mr. Anderson, and Mr. Lindell were absent. Mayor Christiansen was also present. Civilian members present for their Committee meetings were Ms. Scarborough (Utility), and Mr. Shevock and Dr. Stewart (Legislative, Finance, and Administration). Mrs. Doyle (Utility) was absent. UTILITY COMMITTEE The Utility Committee met with Chairman Cole presiding. AGENDA ADDITIONS/DELETIONS Mr. Hare moved for approval of the agenda, seconded by Mr. Neil and unanimously carried. Dedication of Rights-of-Way and Public Infrastructure - Senators Lake Mrs. Donna Mitchell, City Manager, reviewed the background and analysis regarding the dedication of rights-of-way and public infrastructure for the Senators Lake Subdivision. She advised members that this development had been completed, including all of the punch-list items. Mrs. Mitchell noted that the total construction value of the public improvements was $403,399.50, explaining that the estimated construction value was approximately $85,416 for the sewer utility infrastructure, $87,700 for the water utility infrastructure, $115,105 for the storm water infrastructure, and $115,178 for the street infrastructure. Staff recommended acceptance of dedication of rights-of-way and public infrastructure of the Senators Lake Subdivision. Dedication is to include all of the referenced public improvements. Mr. Hare moved to recommend approval of staff’s recommendation, seconded by Mr. Neil and unanimously carried. Governing Policy for Energy Commodity Risk Management Mrs. Donna Mitchell, City Manager, reviewed the proposed revisions to the Governing Policy for Energy Commodity Risk Management (Attachment #1). Staff recommended adoption of the revised policy. Mr. Hare moved to recommend approval of staff’s recommendation, seconded by Mr. Neil and unanimously carried. Mr. Sudler moved for adjournment of the Utility Committee meeting. The motion was seconded by Mr. Hare and unanimously carried. Meeting adjourned at 6:05 p.m.

COUNCIL COMMITTEE OF THE WHOLE MEETING OF JULY 24, 2018 PAGE 2 LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE The Legislative, Finance, and Administration Committee met with Chairman Hare presiding. AGENDA ADDITIONS/DELETIONS Mr. Shevock moved for approval of the agenda, seconded by Mr. Neil and unanimously carried. Bond Counsel Proposal - Public Private Partnership (P3) - Parking Garage Mrs. Donna Mitchell, City Manager, advised that members of City Council had expressed an interest in a downtown parking garage and staff reached out to Ballard Spahr LLP, the City’s current bond counsel, for assistance from their Public Private Partnership (P3)/Infrastructure Group for this Project. She stated that, in doing so, the City will have the expertise needed for the Project and subsequent negotiations. Using the bond counsel will also provide confidentiality of competitive pricing and negotiations. Mrs. Mitchell explained that the Ballard Spahr Proposal consisted of two (2) phases and the expenditure required would be between $100,000 and $150,000. She noted that Phase 1 of the engagement will include preparing a Request for Qualifications and Requests for Proposal for the selection of a preferred vendor, and Phase 2 will commence upon the selection of the preferred developer for the Project and will end upon closing. Mrs. Mitchell stated that Phase 2 will include the negotiations if the City moves forward after Phase 1. Staff recommended authorizing the City Manager to enter into a contract with Ballard Spahr, LLP for legal services for the purpose of conducting solicitations and negotiations for a downtown parking garage “Project.” Mr. Neil stated that he is not normally in favor of P3s because he wants to make sure that the citizens get the best value for their money; however, in the case of this garage, he thought it would be to the City’s advantage to be able to enter into a partnership which would lessen the risk and strengthen what the City is able to do regarding the building. Mayor Christiansen asked if there are time lines and benchmarks that have to be met for each of the phases. Responding, Mrs. Mitchell stated that she thought that the proposal included benchmarks. She explained that they had discussed them and, if they were not included in the proposal, she would get some actual benchmarks and disseminate them to the Mayor and members of Council. Mr. Lewis asked if the bond bill money the City received would cover this entire expenditure. In response, Mrs. Mitchell, advised that this was actually budgeted for in the City Manager’s budget through the budget process and would be coming out of those funds. She reminded members that she had previously stated that she had $200,000 budgeted for a consultant or engineering or whatever the City needed for the P3, whether it be a P3 or whether it would be costs for engineering and design if the City did it on its own. Mrs. Mitchell stated that she thought that the bond bill money is for if the City goes forward with construction. She noted that this is just for the legal needs. Mr. Slavin clarified that the money Mr. Lewis was referring to was the $1M that the City received from the State of Delaware. He stated that those funds have to be used for bricks and mortar and

COUNCIL COMMITTEE OF THE WHOLE MEETING OF JULY 24, 2018 PAGE 3 cannot be used for fees like this. Mr. Lewis stated that he wanted that clarification so the public is aware that it is City money that is being used for the legal purposes. Mr. Slavin noted that he thought that, as Mr. Neil indicated, this is such a smart way to do this project because it reduces the risk for the City. He explained that this option allows someone else to represent the City, handle the risk, and go through the proposals in a very transparent way. Mr. Slavin stated that the alternative would be the traditional route, which he thought would be very risky, and if the City took that route, they would currently be looking at engineering and architectural fees just to see whether the City could afford to move forward. He noted that the other part of this is that once the City accomplishes its first successful P3, the City will have that experience and be able to do it again. Mr. Slavin moved to recommend authorizing the City Manager to enter into a contract with Ballard Spahr, LLP for legal services for the purpose of conducting solicitations and negotiations for a downtown parking garage “Project,” as recommended by staff. The motion was seconded by Mr. Cole. Responding to Mr. Hare, Mrs. Mitchell confirmed that this was not committing the City to construction or anything like that. Mr. Hare asked if this matter would have to go to referendum if it was recommended for approval and would cost the City more than $3M. In response, Mrs. Mitchell explained that if the City were to do a bond issue over a certain limit, it would have to go to a referendum; however, a P3 is more like a lease payment, so it would not have to go to a referendum. Mr. Hare questioned whether citizens would have a say if the City decided to build a $15M parking garage and Mrs. Mitchell explained that she did not believe that they would for a P3 because it could go through Council. Mr. Slavin clarified that the citizens would have every say in it because they have an opportunity to attend every Committee and Council meeting. He stated that the citizens would have the opportunity when the City has the Requests for Proposal (RFP) and when Council makes a decision along the way. Mr. Slavin noted that this would be a series of votes that City Council, whether it is this Council or the next one, has to make and that they would be transparent about it every step of the way. The motion to recommend authorizing the City Manager to enter into a contract with Ballard Spahr, LLP for legal services for the purpose of conducting solicitations and negotiations for a downtown parking garage “Project,” as recommended by staff, was unanimously carried. Review of Pension Benefits - Cost of Living Adjustment (COLA) (2018 Budget Hearing) Mrs. Donna Mitchell, City Manager, reminded members that, during the Special City Council Meeting - Budget Review of May 29, 2018, a conversation regarding retiree benefits came up and Mr. Slavin asked that this item be placed on a Legislative, Finance, and Administration Committee agenda to determine if the City can do something midyear. She stated that she believed that in the past there had been a motion for an annual review and, when the City did a cost of living adjustment (COLA) last year, she was surprised to learn that the City had not done a COLA since 2006. Mrs. Mitchell advised members that, included in the Fiscal Year 2018 Budget, City Council

COUNCIL COMMITTEE OF THE WHOLE MEETING OF JULY 24, 2018 PAGE 4 approved an ad hoc 2% COLA for the General Pension Plan retirees and the annual cost was $87,982, as calculated by the City’s actuary. Mrs. Mitchell informed members that she had reviewed the State plans and noted that the legislature grants a COLA every once in a while; however, all of their plans are at least 87% to 100% funded, and some are actually over funded. She reminded members that the City’s plan was currently at 65%. Mrs. Mitchell stated that one of her concerns was that the 2% COLA last year was $88,000, and if members put another 2% in this year or next year, that would be another $88,000 taken away for the actual operating budget. She explained that the City has had some tight times and that does not help fund the operating budget because it is going to be cumulative. Mrs. Mitchell advised members that the City currently has 210 non-police Defined Benefit Plan retirees/spouses of which 110 also receive Medicare B reimbursements, and the Defined Contribution Plan currently has 27 retired employees. She stated that there are currently 95 non-police Defined Benefit Plan active employees and 141 Defined Contribution Plan active employees. Mrs. Mitchell stated that the City has developed two (2) sets of employees, those in the Defined Contribution Plan and those in the Defined Benefit Plan. She explained that the Defined Benefit Plan does not have a provision for COLAs; however, the employees can request a COLA from the legislative body and, in the past, ad hoc COLAs have been considered and approved when presented to City Council. Mrs. Mitchell stated that based on law, the City cannot give the Defined Contribution Plan employees a COLA. Mrs. Mitchell stated that, while she understands the retirees’ rationale, the retirement plans have been moving away from this provision and the State of Delaware’s plans are pretty much closed on automatic COLAs. Mrs. Mitchell cautioned members, if the City does approve a COLA, that accounting pronouncements changed with the latest accounting standard changes and if an ad hoc COLA is considered substantive, then it is considered automatic, and has to be calculated into the actuary liability as if they are automatic COLAs. Mrs. Mitchell read the definition of substantive from the Governmental Accounting Standards Board (GASB) Pronouncement 67, as follows: Considerations that might be relative to determine whether such changes are substantively automatic include the historical pattern of granting the changes, the consistency in the amounts of the changes, or in the amounts of the changes relative to a defined cost of living or inflation index. Whether there is evidence to conclude that changes might not continue to be granted in the future despite what might otherwise be a pattern that would indicate such changes are substantively automatic. Mrs. Mitchell reiterated that, if the City does a COLA frequently, they will have to be included in the actuary liability. She stated that she would recommend a five (5) to 10 year window if the City is going to do anything; however, she advised that she would really like to see the funding up higher than 65% before a COLA is considered, which was her recommendation. Staff recommended future ad hoc cost of living increases for the participants of the Defined Benefit Plan be taken under consideration in years where the Pension Plan is fully funded.

COUNCIL COMMITTEE OF THE WHOLE MEETING OF JULY 24, 2018 PAGE 5 Responding to Mr. Slavin, Mrs. Mitchell confirmed that the staff recommendation would be the policy of the City, and it would be up to each Council whether they want to amend the policy in a given budget year. Mr. Slavin asked if it is possible to give retirees a one-time payment that doesn’t go to the base amount, like a bonus or a stipend. In response, Mrs. Mitchell stated that she thought that it would be possible to give a bonus or something similar, rather than a percentage, if it is infrequent. She explained that if a bonus was given frequently, then that would have to be done the same way. Mrs. Mitchell stated that she thought that would be a potential way of doing this; however, she cautioned members that Deputy City Solicitor William Pepper had previously advised her to ensure that whatever she does, do it consistently among the whole group, in order to avoid a discrimination issue. Mr. Slavin stated that he was just looking for different tools that may be available to achieve the outcome without worrying about what the IRS is prohibiting. Mr. Hare asked if it would be possible to discuss this matter every two (2) years instead of every five (5) to 10 years, or if a COLA is not given this year and Social Security gives half a percent increase, the City could discuss it next year and maybe give them half a percent. Responding, Mrs. Mitchell advised that if members are going to discuss it every year and give something every year, it’s going to be considered automatic. She suggested that members could review the pension funding level every so many years and make a decision based on that, explaining that if it has increased five (5) points, then maybe members might want to do something at that time. Mr. Hare indicated that, as Mr. Slavin said, it could be a one-time bonus instead of a percentage, and stated that he did not think the City should go five (5) to 10 years without discussing this matter. Mrs. Mitchell advised that she is looking at the liabilities and trying to get the funding level up, so that it is not impacted, explaining that as members impact that, they are impacting what is available for the budget. Mr. Hare suggested discussing this matter again in the spring to see where the funding liability is when it is time to budget. Responding to Mr. Hare, Mrs. Mitchell stated that her recommendation would be to discuss this matter when the Plan is fully funded; however, members can amend her recommendation as they see fit. She advised that her recommendation was based on the budget impact, explaining that the funding level significantly affects the liabilities. Mr. Hare noted that he could not remember the last time the Plan was fully funded. In response, Mrs. Mitchell advised that one of the things that affected the funding was when the Plan was moved out of the retail portfolio with Merrill Lynch to an institutional plan with Pierce Park Group. She explained that when that move was made, all of the investments had to be cashed in and that’s what took the Plan down because there were large market losses during that time. Responding to Mr. Slavin, Mrs. Mitchell confirmed that the investments were moved at the behest of the enrollees. She explained that this was requested because Merrill Lynch was making a lot of fees off of the wealth plan that they had the investments in. Mrs. Mitchell stated that the Plan started to rebound in 2008, however, that was when the market took another dive.

COUNCIL COMMITTEE OF THE WHOLE MEETING OF JULY 24, 2018 PAGE 6 In response to Mr. Slavin, Mrs. Mitchell confirmed that one of the reasons why the Plan dropped below 100% funding was also the new GASB standard that required the City to book expenses that were not previously required. Mr. Hare noted that, in reviewing the funding levels of other municipalities, the City’s funding is significantly lower. He stated that the level of other municipalities was approximately 85%, while the City is at 60%. Responding, Mrs. Mitchell advised that the City had made a lot of progress over the last several years, noting that the funding level was at 40% not too long ago. She stated that the market had rebounded in the last couple of years, and the City was putting in the excess money from personnel savings in the prior year budget and had put a lot of electric money into the plan to get it funded. Mr. Hare indicated that he thought members should at least review this matter every other year. In response to Mr. Shevock, Mrs. Mitchell stated that she did not have a schedule or projection of when the percentage might be higher, explaining that one never knows what the market values are going to be at the end of the year. She advised that the City is funding the Plan based on the actuary required contributions. Mr. Cole asked if there was any reason why members could not continue to review the funding each year. Responding, Mrs. Mitchell stated that if members wanted to continue to have this discussion every year, she was okay with keeping it the way it was. Mr. Hare noted that discussing this matter every year might at least help members understand why the funding isn’t going up. Mr. Hare moved to leave it like it is, seconded by Mr. Sudler. Mr. Lewis stated that, for the most part, he concurred, noting that members can at least get an update annually. Mr. Slavin asked that an opportunity be provided for public comment prior to members voting on the motion. The motion to leave it like it is was rescinded by Mr. Hare and Mr. Sudler. Mr. Lester Blakeman, Sr., 209 Falmouth Way, reviewed information he had compiled regarding the civilian pension plan (Attachment #2). Mr. Blakeman, referring to item 3 on his handout entitled “Points to Pounder, Civilian Pension Plan” and the “Breakdown of Monthly Pension Payments, Civilian Pension Plan (Retiree Payment as of January 15, 2008),” noted that in 2008 there were 74 retirees making less than $1,000 per month, 62 retirees making less than $2,000 per month, 33 retirees making less than $3,000 per month, one (1) retiree making $3,090 per month, one (1) retiree making $4,212 per month, and one (1) retiree making $4,551 per month, so they were not getting rich on their pension payments. He stated that some of the retirees were actually receiving $200 per month, so the 2% increase gave them an additional $480 per year. Mr. Blakeman indicated that those people are struggling and a lot of them are spouses of retirees who have died, which is a difficult group to deal with.

COUNCIL COMMITTEE OF THE WHOLE MEETING OF JULY 24, 2018 PAGE 7 Mr. Blakeman stated that there’s no question in anybody’s mind that the goal of fully funding the pension plan is extremely critical and he will support anything that accomplishes that goal. He requested that, prior to making a decision, members of Council be provided with the monthly payment amounts for all current retirees, listed from lowest to highest, without their names but including their status, age, and date of retirement. Mr. Blakeman indicated that he thought that this would give members the ability to see the people they’re talking about and the amounts they are receiving, so they can make an informed decision regarding increases. Mr. Blakeman also requested some type of assurance of when the Plan would be fully funded, explaining that the retirees need some confidence that it will not be another 12 years before a COLA is made. He stated that he knew that this seemed like a lot; however, he asked members to understand his perspective that all union and non-union employees and police retirees get an increase every year, and the civilian retirees are the only group that do not. Mr. Blakeman noted that the pension plans are non-negotiable and were written by the City for the two (2) employee groups, with no input from them. He indicated that he thought that the civilian retirees had provided as much support, help, and success in being a place where people want to live as everybody else, and they should not be singled out because the plan is not fully funded. Mr. Blakeman stated that the cost of living had increased for the civilian retirees just like it had for everyone else, yet in the past 12 years, they only received a 2% increase. He noted that he really wants to have the plan fully funded; however, he does not know why the retirees should be punished, since the unfunded liability is not their fault. Mr. Blakeman reminded members that the GASB told the City some time ago that the City should have been funding the pension plan and the expenses as they went and that was not done. He stated that the sitting Councils elected to put it off, until they finally had to start acknowledging it. Mr. Blakeman indicated that he did not believe that it was fair for Council to tell the retirees that they do not get a COLA because it’s going to cost more money, when they give the employees a pay raise, which also takes money. Mr. Sudler asked Mrs. Mitchell if the City could look into Mr. Blakeman’s request regarding an increase for the civilian employee pension plan members. Responding, Mrs. Mitchell reminded members that the civilian retirees in the 401 plan do not get the option for a COLA and they also helped do the same things for the City that the other civilian retirees did. She advised that the real issue, however, is budgetary, explaining that the City did not plan on a COLA or get an actuary analysis, so she was not prepared to provide an opinion regarding whether the City should give a COLA. Mrs. Mitchell stated that it was her recommendation that if Council is going to give a COLA every year, it needs to be built into the actuary study, and that it would cost more than $80,000, so Council would need to decide where the revenue is going to come from. Mrs. Mitchell reviewed the current demographics for the General Employee Pension Plan, explaining that the changes in demographics since 2008 have impacted the liability. She stated that there were currently 64 members of the plan receiving under $1,000, 84 members receiving between $1,000 and $2,000, 49 members receiving between $2,000 and $3,000, 10 members receiving between $3,000 and $4,000, six (6) members receiving between $4,000 and $5,000, and one (1) member receiving more than $5,000. Mrs. Mitchell advised that a lot of Baby Boomers are retiring at a younger age because, under the older plan, employees can retire with 20-25 years of service. She explained that these Baby Boomer retirees make higher wages than some of the older retirees and the spouses of the retirees, and they have a long life expectancy, and these factors are impacting the liability.

COUNCIL COMMITTEE OF THE WHOLE MEETING OF JULY 24, 2018 PAGE 8 Responding to Mr. Sudler, Mrs. Mitchell stated that she could not provide an estimate in regard to the cost without the actuarial analysis; however, the cost for an automatic COLA would be significant. In response to Mr. Polce, Mrs. Mitchell stated that the General Employee Pension Plan was 65% funded. Mr. Polce stated that he would like to see the City’s net asset ratio of the unfunded liability portfolio, as well as the net asset ratio of the entire portfolio, explaining that he thought this information would provide members with an accurate representation of the severity of the issue and how quickly they must act. Mrs. Mitchell advised members that the Police Pension Plan does have an automatic 2% COLA and the State of Delaware gives the City approximately $500,000 per year toward funding that unfunded liability and the Police Pension Plan. She stated that the General Employee Pension Plan does not have an automatic COLA, and that Plan is only funded by the City. Mrs. Mitchell noted that, since she had worked for the City in 1978 under the previous Finance Director, as far as she could recall, the City had always had an actuary study and funded the plan based on what the actuary said. She stated that changes in the market, GASB, and IRS since 1978, as well as the Orange County, California scandal and the Dodd-Frank laws had created many issues for the defined benefits plans, explaining that the City did not have complete control over everything that happened and it was not necessarily the City’s funding. Mr. Slavin stated that he thought that the overall sentiment was that members would like to do something and would like the flexibility to do it; however, it is a data driven decision and they do not currently have the data to make that decision. He explained that members needed to be careful about saying that they would review the data every year, noting that, because of the IRS regulations, it would be considered automatic and the City would automatically have to book the expense. Mr. Slavin, referring to Mr. Blakeman’s comment that the GASB said that the City should have been doing this all along, clarified that the GASB did not say that and these were new rules, which were the result of other places, like Enron, that completely underfunded their pensions with the hopes that they would become more successful in later years and left people with nothing. He noted that Mr. Blakeman had stated that everyone except the civilian pensioners get a raise, including elected officials, and clarified that he did not believe elected officials in the City had received a raise since 2002. Mr. Neil stated that he thought that members needed to look at this a little bit differently. He noted that, as Mrs. Mitchell mentioned, people are retiring younger, after 25 years of service, and social security is the ultimate safety net and pensions from state governments are an add-on to that; however, he explained that there is a gap when a person is not eligible for social security. Mr. Neil stated that the question is whether the City should fund pensions so that retirees never have to work again, and if they are considering the pension as the only means by which the retiree will live until they can receive social security. He explained that, with the gap between retirement and receiving social security, he thought that there was a very good chance that the retirees are going to seek employment. Mr. Neil noted that the other factor to consider is the loyalty that the City has to people who have served them loyally. He stated that he thought that it’s a reward that the City gives for the

COUNCIL COMMITTEE OF THE WHOLE MEETING OF JULY 24, 2018 PAGE 9 services that the employees have provided, but questioned whether it should be given as the primary means of being able to live. Mr. Blakeman clarified that he was not requesting a COLA every year and he did not think it was reasonable to ask for a COLA every year. He reviewed the “COLA History” he compiled, noting that he understood from the history that they are not going to get a COLA every year; however, it was addressed on a fairly regular basis. Mr. Blakeman indicated that 12 years was a long time to wait for consideration, stated that some acknowledgment in less than 12 years would be appreciated. Mr. Slavin stated that he thought that this was a topic worth further discussion once members have some of the other data to help inform their decisions. Mr. Slavin moved to lay this matter on the table and have it brought back at a future date when Mrs. Donna Mitchell, City Manager, has gathered the appropriate data, and that it be communicated to Mr. Lester Blakeman and the retirees in advance so they can be a part of the discussion. The motion was seconded by Mr. Sudler and unanimously carried. Mr. Sudler moved for adjournment of the Legislative, Finance, and Administration Committee meeting. The motion was seconded by Mr. Shevock and unanimously carried. Meeting adjourned at 6:49 p.m. Mr. Neil moved for adjournment of the Council Committee of the Whole meeting. The motion was seconded by Mr. Hare and unanimously carried. Meeting adjourned at 6:49 p.m. Timothy A. Slavin Council President TAS/TM/dd S:\AGENDAS-MINUTES-PACKETS-PRESENTATIONS-ATT&EXH\Committee-Minutes\2018\07-24-2018 CCW Minutes JT.wpd Attachments Attachment #1 - Proposed Amendments to the Governing Policy for Energy Commodity Risk Management Attachment #2 - Information regarding the civilian pension plan compiled by Mr. Lester Blakeman, Sr.

ATTACHMENT #1 Council Committee of the Whole Meeting of 07/24/2018 City of Dover, Delaware Governing Policy For Energy Commodity Risk Management Effective: August 28, 2017 TBD Formatted: Strikethrough Approved by: City of Dover Council (Last Revision August 28, 2017)

TABLE OF CONTENTS PURPOSE OF THE RISK MANAGEMENT POLICY ..................................................................4 A. Introduction ....................................................................................................................4 B. Scope of Policy ................................................................................................................4 C. Objectives and Risk Philosophy ...................................................................................5 D. Policy Administration ....................................................................................................5 MANAGEMENT AND CONTROLS .............................................................................................6 A. Utility Committee of The City Council .......................................................................6 B. Executive Risk Management Committee ....................................................................6 1. City Manager ................................................................................................................. 8 2. Director of the Utility .................................................................................................... 8 3. Controller........................................................................................................................ 8 4. TEA Client Services Manager ...................................................................................... 9 DISCUSSION OF RISKS ...............................................................................................................9 MARKETING AND TRADING PRACTICES ............................................................................10 A. Standards of Conduct ..................................................................................................10 B. Products, Activities and Limitations .........................................................................11 C. Contract Documentation and Confirmations...........................................................11 D. Training..........................................................................................................................12 E. New Product Protocol .................................................................................................12 RISK LIMITS AND RISK MEASUREMENTS ...........................................................................12 A. Limits..............................................................................................................................12 1. Delegation Authority .................................................................................................. 12 2. Volume Limits ............................................................................................................. 13 3. Locational Limits ......................................................................................................... 13 B. Stress Testing and Back Testing .................................................................................13 C. Instances of Exceeding Risk Limits............................................................................13 CREDIT POLICY ..........................................................................................................................13 A. Measuring Credit Risk .................................................................................................14 B. Analysis and Extension of Credit Limits ..................................................................14 C. Instances of Exceeding Credit Limits ........................................................................15 REPORTING .................................................................................................................................15 A. Risk Reporting ..............................................................................................................15 B. Credit Reporting ...........................................................................................................17 C. Hedge Effectiveness Reporting ..................................................................................17 2

INFORMATION TECHNOLOGY SYSTEMS ............................................................................17 POLICY DISTRIBUTION AND COUNSEL ...............................................................................18 A. Distribution Outside The City ....................................................................................18 B. Designated Counsel .....................................................................................................18 APPENDIX A – Approved Products .............................................................................................19 APPENDIX B – Approved Counterparties and Threshold Tables ................................................20 APPENDIX C – Business Risks ....................................................................................................25 APPENDIX D – Glossary ..............................................................................................................26 APPENDIX E – Swap Transaction Representative .......................................................................28 3

PURPOSE OF THE RISK MANAGEMENT POLICY A. Introduction The City of Dover (“City”) and its customers are routinely exposed to energy price risk, volume variability risk, basis risk and credit risk – herein referred to collectively as energy commodity risk - in the normal conduct of serving its electric load requirements. Volatility of energy commodity prices and volumetric uncertainty (either supply/generation or load obligations) impose a substantial and direct risk to the City’s financial and operating performance. By authority of its charter, the City has responsibility for overseeing the City’s electricity operations, including the management of its cost of serving Dover’s customers. By agreement dated May 6, 2011 and approved by the City (the “EMA”), the City has engaged The Energy Authority, Inc. (“TEA”) to assist the City with Asset Management and Strategic Planning Services, Risk Management Services, and Energy Management Services. This Policy for Energy Commodity Risk Management (“Policy”) is established the explicit understanding that the City has retained and delegated responsibilities to TEA to provide Risk Management Services. Additionally, the City has issued this Policy for dealing with the philosophy, framework and delegation of responsibilities necessary to govern activities related to Dover’s energy commodity risk management. As set forth herein, the City has established an organizational structure, delegated responsibility and established internal controls and procedures to ensure that all transactional and oversight activities are conducted in compliance with this Policy and in accordance with the City’s normal reporting, legal, financing and regulatory requirements relating to energy assets and transactions. B. Scope of Policy This Policy covers all transactions entered into the by the City of Dover designed to meet the City’s electric load requirement and the management of risk related to these transactions. In the event of conflict between this Policy and the EMA, the Policy shall control. This Policy is separate and distinct from enterprise risk management policies and procedures addressing the City’s safe operation of its generating stations and energy infrastructure, insurance requirements, permit compliance, employee matters regulatory compliance with laws and regulations of the State of Delaware and Federal 4

Agencies such as EPA, FERC, NERC and CFTC or other potential risks to the City beyond the purchase and sale of fuel and electric power and its ancillary products. C. Objectives and Risk Philosophy The objectives of the Policy are to identify energy commodity price and credit risk exposures and give the City a framework for the quantification and management of these exposures. The Policy will identify the reports needed to convey how the identified risk exposures can potentially impact the City’s overall cost of providing electricity service to its customers and report on the risk management of the transactions associated with City’s electric load requirements. Under the Policy, risk management activities will be conducted consistent with the City’s overall objective of appropriate risk mitigation. There are several objectives of the Policy which, when taken and executed together, serve to manage the City’s energy commodity price exposures. Specifically, the Policy:  Establishes framework for developing credit limits for counterparties and quantifies and manages the credit exposures related to potential counterparty abrogation  Quantifies the impact of the above exposures on City’s financial results  Manages the impact of the above exposures in line with the City’s identified level of risk tolerance  Provides clear delineation of responsibilities and authority, outline a separation of duties, and ensure reporting of risk is timely and accurate.  Ensures that the impact of any action affecting the City’s position is consistently quantified, monitored and authorized. The City’s risk management activities will be conducted consistent with its overall objective of appropriate risk mitigation and never for purposes of speculation. D. Policy Administration This Policy has been approved by the Executive Risk Management Committee and The Utility Committee of the Dover City Council. The Utility Committee must approve modifications to the Policy with the exception of the appendix information which can be modified with the approval of the Executive Risk Management Committee. 5

MANAGEMENT AND CONTROLS This Policy articulates the management and organization of the City and TEA to serve as a control framework outlining delegation of duties and responsibilities. A. Utility Committee of The City Council The Utility Committee of The City Council (The Committee) has a responsibility to provide approval of this Policy. With this approval, The Committee also assumes additional duties. They will understand the risks the City is and could be exposed to due to their energy commodity risk management activities. In this role, the Committee will have a responsibility to also understand the City’s policies and procedures, internal controls and systems which are used to help manage the City’s energy commodity risks. The Committee will approve any amendments to the Policy or limits within. The Executive Risk Management Committee will update the Committee periodically regarding the Policy and its functions. It will be the Committee’s responsibility to:  Discuss guidelines and strategic policies that govern the process by which the Energy Risk Management Committee assesses and manages risks  Review and approve the risk policy at least annually  Approve new members of the Executive Risk Management Committee  Acknowledge the risk inherent in transactions covered under this Policy B. Executive Risk Management Committee An Executive Risk Management Committee (“ERMC”) has been formed to provide executive management oversight for the City’s energy commodity risk management activities. The ERMC is charged with the creation, amendment and administration of this Policy, including acquiring any approvals required by the Utility Committee, and will ensure that all energy commodity risk management activities of the City are performed consistent with this Policy. The ERMC will meet at least monthly to review compliance and conduct its business as described in this Policy. The ERMC shall be comprised of the following voting members: The City Manager, The Director of Utility, The City’s Controller and TEA’s Client Service Manager. The City’s ERMC will make decisions following the process outlined in this Policy. TEA’s Client Services Manager may include representatives from other areas within TEA in the monthly ERMC meetings who will attend in person or by conference call as non-voting advisors. Other City employees and TEA staff may also be asked to attend 6

meetings from time-to-time, as the ERMC deems necessary. The responsibilities of the ERMC shall include:  Establish scope and frequency for management reporting to the Utility Committee.  No less than annually, review the City’s Energy Commodity Policies and Procedures for correctness and completeness.  Review and approve any new risk report or change to an existing risk report provided by TEA to monitor risks outlined in this Policy.  Understand and approve any models, methodologies, and assumptions used for measuring risks such as volume risk, process risk, counterparty risk and commodity risk.  Monitor the City’s risks and ensure they are within the limits and are being managed according to what is indicated within the City’s Policy and associated procedures  Understand the City’s risk management objectives and risk tolerances.  Review and approve the risk management and trading strategy programs and associated risk. Each program should be reviewed to ensure alignment with Policy objectives and compliance with risk limits within this Policy.  Periodically review any risk management program approved in light of recent market changes, and ensure continued compliance with its established guidelines  Review and approve new products, markets, trading counterparties and credit limits  Review all violations and exceptions to this Policy and report such to the Committee.  Approve the individuals or companies that engage in the City’s commodity transactions and are subject to the limits within this Policy.  Ensure that the individuals or companies authorized to transact on behalf of the City as well as manage its risks, are appropriately trained and qualified.  Ensure independence and segregation of duties between front, middle and back office at TEA.  Recommend changes to this Policy to the City’s Utility Committee for approval and ensure the Utility Committee understands the City’s overall compliance with this Policy and associated procedures.  The ERMC will meet at least monthly to review risks identified and reported on by the Policy, this meeting shall be chaired by The City Manager. Minutes of each meeting of the ERMC shall be recorded and reflect any decisions and follow-up action items to be performed. These minutes will be reviewed and approved by the members of the ERMC in a timely manner. 7

Each member of the ERMC has a unique role as defined below: 1. City Manager The City Manager is independent of all commercial functions and carries the responsibility of establishment and maintenance of risk management for the City. The City Manager will be a voting member of the ERMC and act as a chair of the ERMC. Other responsibilities include:  Ensure this Policy is maintained.  Oversee reviews of the City’s energy commodity risks, limits, risk measurement methodologies and models, and programs and recommend changes to the ERMC.  Ensure potential transactions and their impacts on the City’s risks and limits defined within this Policy.  Develop and monitor the implementation of the Policy, and oversee other risk management processes and procedures established by this Policy or otherwise by the ERMC. 2. Director of the Utility The Director of the Utility has oversight for all trading, hedging, pricing, structuring, and market and operational risk management activities associated with the City. The Director of the Utility will be a voting member of the ERMC. Other responsibilities include:  Review the effectiveness of transaction processing systems and procedures relating to risk measurement.  Recommend operational risk and business risk assessment guidelines. 3. Controller The Controller is independent of all commercial functions and carries the oversight responsibilities associated with the City’s accounting practices. The Controller will be a voting member on the ERMC. Other responsibilities include:  Perform financial accounting including accounting for hedging and derivatives activities.  Comply with tax rules and make appropriate tax elections.  Record realized and unrealized gains and losses.  Reconcile general ledger, cash transactions and margin accounts.  Implement tax-hedge accounting policies and other regulatory tax requirements. 8

 Develop and maintain documentation outlining standard procedures for conducting business.  Invoice counterparties and resolve billing disputes.  Perform daily/weekly/monthly transaction checkout with counterparties.  Develop and maintain documentation outlining standard procedures for conducting business. 4. TEA Client Services Manager The TEA Client Service Manager roles and responsibilities are defined exhibit B of the EMA between the City and TEA. The TEA Client Service Manager will be a voting member on the ERMC. Other responsibilities include:  Monitor risk reports between ERMC meetings.  Report to the Committee and the ERMC on the City’s adherence to all limits and functions within this policy.  Engage the ERMC in discussions regarding events or developments that could expose the company to potential losses.  Recommend to the ERMC specific risk limits consistent with the City’s risk management objectives, risk tolerance, and risk management policy.  Coordinate and distribute independent market fundamental analysis.  Provide advisory support and recommendations as specified in Article 5 of the EMA.  Update RMC on training of TEA employees. DISCUSSION OF RISKS This Policy covers the management of all material energy market risks faced by the City. A comprehensive list of risks that are or could be relevant to City is shown in Appendix C of the Policy. Among the most critical of these risks are commodity risk, counterparty risk, process risk, volume risk, and budget risk. These risks are measured by the limit structure and controls outlined in the Policy. Commodity risk represents the potential adverse impacts to the value of the City’s portfolio due to changes in the market. Commodity risk encompasses volatility risk, forward price risk, basis risk, correlation risk and liquidity risk. Counterparty risk represents the potential losses the City could incur due to delivery risk and receivable risk. Delivery risk stems from a supplier or trading counterparty that is unable or unwilling to perform on its commitments including but not limited to delivery or receipt of commodities. Receivable Risk includes the City’s risk associated with a counterparty’s timeliness of payment for services rendered. 9

Process risk represents the risks associated with process problems including, but not limited to, inaccurate data capture, untimely trade execution or settlement problems. Controls over process risks are embedded in the organizational structure of TEA through the design processes and operating procedures. Volume Risk represents the potential for unforeseen changes from projections of excess or shortfall of capacity or energy from the actual needs. When variances are large coupled with large costs to transact and adverse moves in market prices this risk could be realized. In management of this risk, the City must be aware of the fact that unexpected variations in volume are often highly correlated with price movements. Budget Risk represents the potential to deviate outside of tolerable bounds of the City’s budget. Deviations from budget can be caused by forecast error or unforeseeable adverse changes in market prices. Regulatory Risk arises from participation in regulated markets. With the Independent System Operator (ISO) implementation of Federal Energy Regulatory Commission (FERC) Order 741, the City faces increasing regulatory risk when participating in wholesale energy markets. The TEA Compliance department works in conjunction with the TEA Risk Control department to help the City manage regulatory risk. Regulatory risk is managed by:  Annual Compliance Training for all employees participating in regulated markets;  Integration of the appropriate compliance culture within the Trading department through ongoing interaction between Compliance and Trading;  An independent monitoring and exposure measurement on transactions that could trigger an increase in regulatory risk. MARKETING AND TRADING PRACTICES A. Standards of Conduct Individuals authorized to transact for the City shall not misrepresent, conceal or withhold information regarding energy commodity trading and risk management transactions to any person responsible for the accurate recording and/or reporting of such transactions; participate in any such transaction or similar activity for the benefit of any party other than the City; or hold or be a beneficiary of any financial interest in any entity with which the employee is engaged in trading or other business activity (other than ownership of an interest in a mutual fund managed by another party). Further, no employee authorized to place or execute such transactions may engage in trading power or energy commodities derivative instruments for his or her personal account. 10

B. Products, Activities and Limitations Pursuant to achieving the City’s core objectives for the purpose of energy commodity risk management, the following limitations shall apply.  Permissible instruments will be restricted to the products and instruments specified in Appendix A – Approved Products of the Policy; o All physical forward transactions shall be governed by the Edison Electrical Institutive (EEI), North American Energy Standards Board (NAESB), or similar agreements with counterparties approved by the City. o The City reserves the right to enter into financial hedge transactions to effectuate Policy objectives, but does not authorize TEA to enter into financial hedge transactions on its behalf. Any such financial transactions that the City may enter into shall be governed by ISDA agreements with counterparties as approved by the City.  The maturity for each permissible instrument will be restricted to the maturity limits specified in the risk limits section of the Policy.  Transaction volumes for each risk management transaction will be restricted to the amounts specified in the Risk Limits section of the Policy.  Risk management transactions will be outlined in the City of Dover Hedge Program which will be approved by the ERMC. Risk management transactions may include the following: o Hedging the forward price of purchased power for delivery to the City as needed to meet its electric load requirements. o Hedging the forward price of natural gas and fuels as needed to generate power to meet the City’s electric load requirements. o Unwinding of hedges to accommodate changes in expected load requirements, or for economic reasons subject to explicit constraints set by the ERMC. C. Contract Documentation and Confirmations No over-the-counter transaction may be executed until an EEI, NAESB, or similar agreement has been authorized by the City, approved by the ERMC and fully executed by the parties. Written confirmations will be required from counterparties, as defined in the Master Service Agreement between the City and counterparty, within one business day or such longer time as required by the contract in question for all risk management transactions. Contemporaneous with any commitments and prior to receipt of written confirmations, verbal commitments shall be memorialized internally as to instrument structure, quantity, relevant time horizon, price and any other relevant terms; such internal 11

documentation shall be time stamped and correlated to the ultimate written confirmation to or from the counterparty. Both the internal documentation as well as the written confirmation from the counterparty shall be provided to TEA’s Risk Control Group immediately upon receipt for verification. In the event that there is a material failure to provide timely documentation or confirmations, then at the City Manager’s sole discretion, the offending individual’s authorization may be suspended. Similarly, if the failure to provide timely documentation or confirmations is due to the failure of counterparty, then at the discretion of the City Manager, a moratorium may be imposed on transactions with that counterparty. In such cases, the City Manager shall notify the ERMC of the issues leading to the suspension or moratorium shall. Nothing herein shall inhibit the City Manager from bringing control issues to the TEA’s Client Services Manager prior to a decision on materiality or the imposition of a suspension of trading privileges or counterparty moratorium. D. Training The ERMC will ensure that all City employees and/or TEA Staff that will execute transactions on behalf of the City will have appropriate training in the markets in which the transactions occur. E. New Product Protocol As required to manage the City’s energy commodity risk the ERMC shall approve new products provided the requirements of the New Product Approval Procedure are met. RISK LIMITS AND RISK MEASUREMENTS A. Limits The limit structure is designed to quantify the types of risk in the City’s energy commodity portfolio. The City will manage and report on its energy commodity market risk using Delegation of Authority Limit, a Volume Limit and a Locational Limit. 1. Delegation Authority The Utility Committee delegates the following approval authority limits to the Dover ERMC. The ERMC may not delegate these authorities to individuals authorized to commit Dover to financial obligations. 12

Position Maturity Limit Term Limit Notional Value Limit Dover ERMC 5 years 5 years 20,000,000 TEA 1 month 1 month 1,000,000 This limit structure is not intended for use when transacting day-ahead and real time in the PJM market. 2. Volume Limits For no reason should a transaction be executed that exceeds the City’s electric load requirements. If there is an adjustment to the City’s electric load requirements and the existing transactions greater than 100% of the adjusted electric load requirements the ERMC will review and approve the offsetting strategy deployed in sufficient proportion to mitigate the encroachment. 3. Locational Limits Non-Commodity Transactions must support the requirement of one of the City’s generation units, native load or transaction locations. B. Stress Testing and Back Testing The City’s positions shall be periodically stress tested and models shall be back tested. The processes around these tests are outlined in the Stress Testing and Back Testing Procedure. C. Instances of Exceeding Risk Limits Should the City or TEA enter into a transaction that causes the portfolio to exceed any above mentioned limits the Director of the Utility shall, in addition to notifying the ERMC, also notify the Chair of The Committee as soon as practicable and shall provide periodic reports to the Chair on the status the transactions for as long as the City is exceeding its limits. The ERMC will review and determine whether any liquidation or offsetting of transactions is warranted. The incident will be documented as a Policy Exception by the Director of the Utility. CREDIT POLICY Credit Risk is the risk due to the uncertainty in a counterparty’s ability to meet its contractual obligations. The primary objective of this credit policy is to mitigate, to the 13

extent commercially reasonable, the credit risks associated with transactions covered in this Policy while still allowing the City to achieve its objectives. A. Measuring Credit Risk The status of credit risk will be measured and reported through reports provided by TEA. The current credit exposure will be reported at the agreement level via a Counterparty Credit Report provided by TEA. This information will be made available in real time to TEA trading personnel so that it can be checked prior to executing transactions for the City. Those responsible for risk oversight at the City and TEA will have access to this information no less frequently than once per day. The ERMC will monitor overall credit utilization and any credit exceptions at least monthly. When measuring the current credit risk, netting will be applied to the exposure if the City’s contract with a counterparty includes provisions for netting. B. Analysis and Extension of Credit Limits Physical and financial commodity transactions will be executed with counterparties approved by the ERMC with credit available to support the transactions. The creditworthiness of a counterparty will be determined by both qualitative and quantitative factors. Factors shall include, but not limited to:  A company’s debt credit ratings provided by the rating agencies.  Financial data such as an analysis of the income statement, balance sheet, and cash flow, as well as liquidity and capital structure.  Subjective factors such as company’s fuel diversity, overall size, risk management policy and internal controls, geographic diversity, and market intelligence. A credit limit is the amount of unsecured credit granted to a counterparty. Unsecured credit exposure includes amounts owed by the counterparty, whether billed or not, and the mark-to-market differences in value of any collateral which the counterparty has provided the City. Any net exposure above the collateral threshold will require the posting of collateral by a counterparty. Further information on the City’s procedure for establishing credit is contained in the Counterparty & Credit Review Process. Collateral thresholds, term limitations and credit exposure limits will be subject to the maximums indicated in Appendix B, based upon the lower of the S&P and Moody’s credit ratings. At no time will the City incur a credit exposure with any counterparty greater than $60,000,000. 14

C. Instances of Exceeding Credit Limits The City and TEA are restricted by the credit limits approved by the ERMC. The ERMC can suspend trading with a counterparty, if that counterparty’s credit limit has been reached or exceeded. The City or TEA traders shall not exceed the Counterparty Credit Limit by executing transactions with any counterparty without approval of the ERMC. The ERMC will determine when it’s appropriate to require additional collateral if a counterparty’s credit exposure exceeds its credit limit. Collateral includes standing letter of credit, cash, and prepayments. All credit exceptions will be documented and reported to the ERMC and the Committee as Policy Exceptions. REPORTING A. Risk Reporting Preparation of timely reports is critical to monitoring risk. TEA will furnish the required reports on a regular frequency for the City in a format acceptable to the ERMC. In addition, the ERMC and its designees will be provided access to the City’s risk reports as updated daily via TEA’s secure Web Portal. Reports required on a monthly basis and for periodic meetings of the ERMC include the following:  Profit and Loss Report The Profit and Loss (P&L) Report shows the daily realization of transactions at either the transaction price or the market price as transaction roll from unrealized to realized. This report should show volumes, transaction prices and market prices of realized physical and financial power and fuel transactions.  Mark to Market Report The Mark to Market (“MTM”) Report conveys the potential transaction exposure, of all existing forward transactions executed, if the energy commodity portfolio was liquidated at the most recent market settlement prices. This report should show volumes, transaction prices and market prices of unrealized physical and financial power and fuel transactions. 15

 Daily Activity Report The Activity Report presents a summary of the day’s trades executed in the bilateral energy market.  Cost of Service Report The City’s exposure to energy price risk shall be monitored and reported on a Cost-of- Service basis. All calculations are at the wholesale level. The Cost-of-Service recognizes all prior (expired) months within the Power Year on the basis of actual (incurred) costs, and recognizes all forward (pending) months within the Power Year on the basis of expected forward power and fuel prices and expected forward load-following risks. As defined below, the Cost-of-Service is an aggregation of Forward Energy Commodity Portfolio Cost, the Load Following Cost Expectation and the City’s Budget Target for Purchase Power Expense. o The Net Purchased Power Cost shows the net cost of all physical and financial transactions related to the City’s anticipated commodity requirements for power and fuel and is based on the price of all hedge transactions plus the forward market price of all unhedged transactions valued at current forward prices for energy commodities, customer-level cost per MWH of all physical and financial transactions related to Dover’s actual plus anticipated energy. o The expected fixed costs defined as load-serving entity (LSE) capacity costs, transmission costs and TEA management fees. o The Expected Load-Following Cost for a specified power year is defined as the expected cost (or revenue) associated with intra-month load variations due to weather or other events affecting demand. TEA has completed a historical analysis to measures the effective monthly average unit cost paid for Dover’s PJM Wholesale Load Responsibility (WLR) was calculated for each month since July 2013. From this analysis, TEA recommends using the post-Garrison results as a proxy for future estimates of the WLR and As an interim measure due to lack of necessary Formatted: Font color: Text 1, Strikethrough market information and the rapid evolution of the PJM RTO market, the ERMC has specified $2.50 per MWH as an estimate of the Load Following Cost to be used for estimating the City’s Forward Cost-of-Service Report. The ERMC will update the Expected Load Following estimate while lack of necessary market information persists no less than annually. o For the historical payment analysis, an effective monthly average unit cost paid for Dover’s Formatted: Underline, Font color: Red PJM Wholesale Load Responsibility (WLR) was calculated for each month since July 2013. This effective unit cost was constructed using Dover’s monthly PJM load payment (Dover Budget line item: PJM – Energy, Congestion & Losses), adding back the West Hub hedging credits, and dividing by the WLR. The values pre-Garrison-online and post- Garrison-online were compared with both straight and WLR-weighted averages. This effective LMP therefore includes the effects of intra-month load variations, contributions of both the DALMP and RTLMP, and the additional PJM charge types reflected in the monthly Dover Budget line item: PJM – Energy, Congestion & Losses. Pre-Garrison (July 16

2013 – May 2015) weighted average monthly load costs were $3.02, while the average post-Garrison cost (Jun 2015 – Apr 2018) has been $2.60. o o The Budget Target for Purchase Power Expense represents the City’s view of expected purchase power expense. B. Credit Reporting  Counterparty Credit Report The Counterparty Credit Report conveys the exposure to all counterparties with which the City has credit exposure resulting from its energy commodity risk management activities.  CFTC Reporting The City understands that transacting over the counter (OTC) swaps carries an additional Commodity Futures Trading Commission (CFTC) reporting function. Once required by the CFTC, the City will report on how the City generally meets its financial obligations associated with entering into non-cleared swaps in a manner acceptable to the CFTC. C. Hedge Effectiveness Reporting If the City’s transactions require a hedge effectiveness test, those testing results will be reported to the ERMC no later than one month after the end of the financial reporting period. The report will include a summary of testing methodology, assumptions of the testing and the outcome of results with a pass or fail by transaction. INFORMATION TECHNOLOGY SYSTEMS Since information systems play a vital role in The City’s trading abilities, the City shall ensure that the information systems and technology used to store all transaction information is maintained and secure. The City’s transactions will be stored in TEA’s enterprise trading and risk management system. TEA uses the TriplePoint Commodity XL (CXL) system, integrated with Commodity XL for Credit Risk (Credit Risk). TEA has assigned a Database Administrator (DBA) that is charged with the database security and maintenance for the transaction database, CXL. The following safeguards for data security and backup will be installed:  Transaction data stored in the system of record will be replicated daily to ensure data redundancy;  The CXL database will be backed up at least daily after the close of business. 17

POLICY DISTRIBUTION AND COUNSEL A. Distribution Outside The City The City’s Policy is restricted to the use of the City and TEA organizations. It shall not be distributed outside these organizations without the consent the ERMC. B. Designated Counsel Questions about the interpretation of any matters of this Policy should be referred to ERMC. The ERMC will provide clarification and explanation on any updates to this Policy. All legal matters stemming from this Policy will be referred to the City’s Legal Counsel. 18

APPENDIX A – Approved Products The following shall constitute a list of approved products to be utilized by TEA to manage the City’s energy commodity portfolio:  Physical Power  Physical Natural Gas  Physical Residual Fuel Oil (#2)  Capacity  Financial Power  Financial Options  PJM Demand Bids and Generation Offers  PJM InSchedules  PJM Transmission Products o Financial Transmission Rights o Annual Auction Revenue Rights  PJM Tier 2 Synchronized Reserves The above instruments can be executed by TEA on behalf of the City of Dover for the current and next two successive Power Years (July to June). 19

APPENDIX B – Approved Counterparties and Threshold Tables This Appendix establishes approved counterparties and their Collateral thresholds. Collateral thresholds, term limitations and credit exposure limits that are subject to the following maximums based upon the lower of the S&P and Moody’s credit ratings: Credit Thresholds from Dover Extended to the Counterparty Exelon Generation Company, LLC Threshold S&P Moody's $ 60,000,000 AAA Aaa $ 50,000,000 A- to AA+ A3 to Aa1 $ 40,000,000 BBB+ Baa1 $ 30,000,000 BBB Baa2 $ 20,000,000 BBB- Baa3 $ - Below BBB- Below Baa3 AEP Energy Partners, Inc. Threshold S&P Moody's $ 10,000,000 BBB- and Above Baa3 and Above $ - Below BBB- Below Baa3 BP Energy Company Threshold S&P Moody's $ 60,000,000 AA- to AAA Aa3 to Aaa $ 45,000,000 A+ A1 $ 30,000,000 A A2 $ 15,000,000 BBB to A- Baa2 to A3 $ - Below BBB Below Baa2 Calpine Energy Services, L.P. Threshold S&P Moody's $ 25,000,000 AAA Aaa $ 15,000,000 AA- to AA+ Aa3 to Aa1 $ 10,000,000 A- to A+ A3 to A1 $ 5,000,000 BBB+ Baa1 $ 3,000,000 BBB- to BBB Baa3 to Baa2 $ - Below BBB- Below Baa3 20

EDF Trading North America, LLC Threshold S&P Moody's $ 18,000,000 Fixed Fixed PSEG Energy Resources & Trade, LLC Threshold S&P Moody's $ 20,000,000 BBB- and Above Baa3 and Above $ - Below BBB- Below Baa3 Sequent Energy Management, L.P. Threshold S&P Moody's $ 5,000,000 Fixed Fixed Conectiv Threshold S&P Moody's Unspecified * Above BBB+ Above Baa3 $ - Below BBB- Below Baa3 * Conectiv does not have a defined credit threshold, so for planning purposes, a $10,000,000 threshold is imposed as a conservative limit Macquarie Energy, LLC Threshold S&P Moody's $ 25,000,000 AAA Aaa $ 20,000,000 AA- to AA+ Aa3 to Aa1 $ 15,000,000 A- to A+ A3 to A1 $ 10,000,000 BBB+ Baa1 $ 5,000,000 BBB Baa2 $ - BBB- or below Baa3 or below Morgan Stanley Capital Group Threshold S&P Moody's $ 25,000,000 AAA Aaa $ 20,000,000 AA- to AA+ Aa3 to Aa1 $ 15,000,000 A- to A+ A3 to A1 $ 10,000,000 BBB+ Baa1 $ 5,000,000 BBB Baa2 $ - BBB- or below Baa3 or below 21

NextEra Energy Marketing, LLC Threshold S&P Moody's $ 30,000,000 AAA Aaa $ 25,000,000 AA- to AA+ Aa3 to Aa1 $ 20,000,000 A- to A+ A3 to A1 $ 15,000,000 BBB+ Baa1 $ 10,000,000 BBB Baa2 $ - BBB- or below Baa3 or below Deutsche Bank Threshold S&P Moody's $ 25,000,000 AAA Aaa $ 20,000,000 AA- to AA+ Aa3 to Aa1 $ 15,000,000 A- to A+ A3 to A1 $ 10,000,000 BBB+ Baa1 $ 5,000,000 BBB Baa2 $ - BBB- or below Baa3 or below Barclays Bank Threshold S&P Moody's $ 25,000,000 AAA Aaa $ 20,000,000 AA- to AA+ Aa3 to Aa1 $ 15,000,000 A- to A+ A3 to A1 $ 10,000,000 BBB+ Baa1 $ 5,000,000 BBB Baa2 $ - BBB- or below Baa3 or below Credit Thresholds from the Counterparty Extended to Dover AEP Energy Partners, Inc. Threshold S&P Moody's $ 10,000,000 BBB- and Above Baa3 and Above $ - Below BBB- Below Baa3 BP Energy Company Threshold S&P Moody's $ 30,000,000 AA to AAA Aa2 to Aaa $ 25,000,000 AA- Aa3 $ 20,000,000 A+ A1 $ 15,000,000 A A2 $ 5,000,000 BBB to A- Baa2 to A3 $ - Below BBB- Below Baa3 22

Calpine Energy Services, L.P. Threshold S&P Moody's $ 10,000,000 AA- to AAA Aa3 to Aaa $ 7,500,000 A- to A+ A3 to A1 $ 5,000,000 BBB+ Baa1 $ 3,000,000 BBB- to BBB Baa3 to Baa2 $ - Below BBB- Below Baa3 Exelon Generation Company, LLC Threshold Fitch Moody's $ 60,000,000 AAA Aaa $ 50,000,000 A- to AA+ A3 to Aa1 $ 40,000,000 BBB+ Baa1 $ 30,000,000 BBB Baa2 $ 20,000,000 BBB- Baa3 $ - Below BBB- Below Baa3 Conectiv Threshold Fitch Moody's Unspecified * Above BBB+ Above Baa3 $ - Below BBB- Below Baa3 *Conectiv does not have a defined credit threshold, so for planning purposes, a $10,000,000 threshold is imposed as a conservative limit PSEG Energy Resources & Trade, LLC Threshold S&P Moody's $ 12,000,000 * Fixed Fixed *Threshold is $12,000,000 as long as Dover maintains a Debt Service Coverage greater than 1.25% and Total Net Assets of at least $50,000,000 and Total Net Assets do not decline by more than 25% on a fiscal year end basis. Morgan Stanley Capital Group Threshold S&P Moody's $ 25,000,000 AAA Aaa $ 20,000,000 AA- to AA+ Aa3 to Aa1 $ 15,000,000 A- to A+ A3 to A1 $ 10,000,000 BBB+ Baa1 $ 5,000,000 BBB Baa2 $ - BBB- or below Baa3 or below 23

Macquarie Energy, LLC Threshold Fitch Moody's $ 25,000,000 AAA Aaa $ 20,000,000 AA- to AA+ AA3 to Aa1 $ 15,000,000 A- to A+ A3 to A1 $ 10,000,000 BBB+ Baa1 $ 5,000,000 BBB Baa2 $ - BBB- or below Baa3 or below NextEra Energy Marketing, LLC Threshold Fitch Moody's $ 23,000,000 AAA Aaa $ 18,000,000 AA- to AA+ AA3 to Aa1 $ 13,000,000 A- to A+ A3 to A1 $ 8,000,000 BBB+ Baa1 $ 3,000,000 BBB Baa2 $ - BBB- or below Baa3 or below EDF Trading North America, LLC Threshold S&P Moody's $ 18,000,000 Fixed Fixed Deutsche Bank Threshold Fitch Moody's $ 25,000,000 AAA Aaa $ 20,000,000 AA- to AA+ AA3 to Aa1 $ 15,000,000 A- to A+ A3 to A1 $ 10,000,000 BBB+ Baa1 $ 5,000,000 BBB Baa2 $ - BBB- or below Baa3 or below Barclays Bank Threshold Fitch Moody's $ 25,000,000 AAA Aaa $ 20,000,000 AA- to AA+ AA3 to Aa1 $ 15,000,000 A- to A+ A3 to A1 $ 10,000,000 BBB+ Baa1 $ 5,000,000 BBB Baa2 $ - BBB- or below Baa3 or below 24

APPENDIX C – Business Risks Business Risks Topology Commodity Counterparty Process Volume Budget Regulatory Risk Risk Risk Risk Risk Risk Market Receivables Load Market Price Risk Deadline CFTC Risk Uncertainty Uncertainty Risk Performance Reporting Load Volume Risk Supply Risk FERC Risk Risk Uncertainty M2M/Forward Generation Forecast RTO Curve Risk Uncertainty Error Liquidity Risk Basis Risk 25

APPENDIX D – Glossary Back Office – That part of a trading organization which handles transaction accounting, confirmations, management reporting, and working capital management. Bilateral Transaction - Any physical or financial transaction between two counterparties, neither of whom is an Exchange or market entity (e.g. MISO). Capacity – The real power output rating of a generator or system, typically in megawatts, measured on an instantaneous basis. Commodity - A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade. Financial Bilateral Transaction – A Bilateral Transaction that is non-physical and is defined by a Source Point, Sink Point, and Delivery Point that may be any CP Nodes as specified by the Midwest ISO. Financial Forward – An agreement regarding a position in a specified commodity, a specified price, and a specified future settlement date, that does not result in physical delivery of the commodity. Rather one party in the agreement makes a payment to the other party on the basis of the commodity price at the future date. Front Office – That part of a trading organization which solicits customer business, services existing customers, executes trades and ensures the physical delivery of commodities. Hedging Transaction - A transaction designed to reduce the exposure of a specific outstanding position or portfolio; “fully hedged” equates to complete elimination of the targeted risk and “partially hedged” implies a risk reduction of less than 100%. Mark-to-Market Value – A measure of the current value of unrealized positions; includes both Open Positions and Closed Positions. Middle Office – That part of a trading organization that measures and reports on market risks, develops risk management policies and monitors compliance with those policies, manages contract administration and credit, and keeps management and the Board informed on risk management issues. 26

Policy – Dover’s Governing Policy for Energy Commodity Risk, as amended and approved by The Utility Committee. Portfolio – A collection of transactions. Realized Gains/(Losses) – The amount earned (or lost) from a transaction, considered to be realized once the time for performance has lapsed (e.g. delivery of power in the case of physical transactions or expiration of an option in the case of financial transactions). Term – The total duration of a contract, defined as the number of days between the beginning flow date and ending flow date, inclusive. Unrealized Gains/ (Losses) – The amount expected to earn (lose) on a specific transaction(s); however, the time for performance has not lapsed. The total value of Unrealized Gains/ (Losses) is the Mark-to-Market value. 27

APPENDIX E – Swap Transaction Representative Purpose: To ensure that the City of Dover, a Special Entity under the Dodd-Frank Financial Reform Act, selects a qualified representative (“Representative”) to provide advice and guidance when entering into swap transactions with Swap Dealers or Major Swap Participants. Definitions: Special Entity: As defined in 7 U.S.C. 6s(h)(2)(C) and further interpreted in 17 C.F.R. 23.401(c). The City of Dover is a Special Entity as defined by 17 C.F.R. 23.401(c)(2). Swap Dealer: As defined in 7 U.S.C. 1a(49) and further interpreted in 17 C.F.R. 1.3(ggg) Major Swap Participant: As defined in 7 U.S.C. 1a(33) and further interpreted in 17 C.F.R. 1.3(hhh) Representative: As defined in this policy and 17 C.F.R. 23.450 Policy: Selection: The City of Dover shall endeavor to seek and employ an individual or entity that will voluntarily act as a Representative for all energy commodity swap transactions between XXXX and any Swap Dealer or Major Swap Participant. The Representative must meet the following qualifications identified in 17 C.F.R. 23.450(b): (i) Has sufficient knowledge to evaluate the transaction and risks; (ii) Is not subject to a statutory disqualification; (iii) Is independent of the swap dealer or major swap participant; (iv) Undertakes a duty to act in the best interests of the Special Entity it represents; (v) Makes appropriate and timely disclosures to the Special Entity; (vi) Evaluates, consistent with any guidelines provided by the Special Entity, fair pricing and the appropriateness of the swap; and (vii) In the case of a Special Entity as defined in § 23.401(c)(2) or (4), is subject to restrictions on certain political contributions imposed by the Commission, the Securities and Exchange Commission, or a self-regulatory organization subject to the jurisdiction of the Commission or the Securities and Exchange Commission; provided however, that this paragraph (b)(1)(vii) of this section shall not apply if the representative is an employee of the Special Entity. The Representative and the City of Dover shall enter into a legal agreement that binds the Representative to comply with items (i) through (vii) in this policy. At no longer than any 12 month interval, the City of Dover shall review the performance of the Representative to ensure compliance with items (i) through (vii) in this policy. 28

ATTACHMENT #2 Council Committee of the Whole Meeting of 07/24/2018 POINTS TO POUNDER CIVILAN PENSION PLAN l>Average Pension Payments (2017 CAFR) Plan Police G.E. 2017 Payments $1,528,191 $3,746,045 Members 47 205 Average Pension $32,515 $18,273 Delaware Minimum wage 2017 $8.25/hour = $17,160 a year 2> Chang in plans for the last 12 years (cumulative) Police G.E. 24% 2% 3> G. E. Pension payments - last published list January 2008 G. E. Members less than $1,000 a month ($12.000 a year) 74 G. E. Members $1,000 - $1,999 a month ($23,988 a year) 62 G. E. Members $2,000 - $2,999 a month ($35,988 a year) 33 G. E. Members $3,090 a month ($37,089 a year) 1 G. E. Members $4,212 a month ($50,544 a year) 1 G. E. Members $4,551 a month ($54662 a year) 1 4> G. E. Pension plan Audit Full Audit of the General Pension Plan (not the limited review in the CAFR)

The goal of fulling funding the Defined Benefit Plan should be a high priority, it would be very reassuring to the members of the plan to know what that value is and when will be reached. In 2003 the pension payment was $2,073,202 with a fund balance of $14,446,848 in 2017 the pension payment was $3,746,045with a fund balance of $39,365,436. The fund balance went up $24,918,588 while the annual payment went up $1,672,843 At a Council Workshop November 3, 2008 a plan was presented to Amortize a $24,4518,821 Unfunded Liability for the Civilian Pension Plan totaling $41,890,827 - Increasing plan or $39,757,357for a Level plan. In January 24, 2017 a report by nyhart listed the unfunded liability for July 2014 as $25,452,793 and the July 2016 as $22,060,391. I would like to make two request: City Council be provided with a listing of all current retirees without names - listed in order of monthly payment lowest to highest, with status SS or GE, age and date of retirement. This would provide an understanding of the people involved. The current amount of the unfunded liability and the plan to fund it.

09 L66' ~~$ 08666$ I lil;'\ 96"v5L' ~,$ 856L6$ £L 8C:"05L'~~$ 6,"6L6$ U OO"LOO'~,$ 5(;"n6$ ,L (;£ (;176'0,$ 98 •• 6$ OL 9L"60L'0,$ 817"(;68$ 69 9v059'O~$ 175"L99$ 99 WV(;9'0,$ L£ 588$ L9 09",£17'0,$ 0£"698$ 99 08178£'0,$ 017598$ 59 9S6S~'0,$ £9"9178$ 179 9, '880'0,$ 89'0178$ £9 (;,"L8v'£(;$ 9(; L56',$ (;~'V68'6$ ,517(;8$ I (;9')") (;6'9178'(;(;$ ~6 £06' ,$ 017'809'6$ 0L"008$ ,9 817L£L'C;C;$ 6L"V68' ,$ 80',LS'6$ 6S L6L$ 09 89vL5'C:(;$ vn88',$ 9n£v'6$ 86S8L$ 65 80'V£S'(;(;$ VBLL8'~$ 96'VS£'6$ 8S'6LL$ 8S 9L 8LV' (;(;$ £(; £L9' ,$ 017'(;££'6$ OLLLL$ L5 17(;08£'(;(;$ (;O'S98' ,$ 80'£S(;'6$ 60 ~LL$ 95 8v'9(;£'C;C;$ VS'098',$ (;,6£0'6$ 9(;'£SL$ 55 VC;99~'(;(;$ c;o'6v9' ,$ 99'6~0'6$ V9,5L$ 175 09'8176',(;$ SO 6(;8' ~$ US(;6'8$ ,8'£VL$ £S 9£ (;6L' ,(;$ £0'9,8' ,$ 9L£L8'8$ 8176£L$ (;S 8(;'OW,(;$ 69'98L' ,$ (;,'898'9$ ,O'6£L$ ,S 170'9(;0',(;$ L, (;SL'~$ 96'vU'8$ 80 LU$ OS 8(;17£8'0(;$ 6, '9£L' ,$ (;6£(;9'8$ 998,L$ 617 W6LL'0(;$ (;9 ,£L'~$ 80-.sS'8$ 60'S,L$ 817 89'0,17'0(;$ 68'OOL' ,$ 8(;'86v'8$ 6, '80L$ Lv 80' ,0, '0(;$ 60'SL9',$ 960(;(;'8$ 80'S89$ 917 9,568'6,$ £6'L59',$ 006,L'L$ 5(;'£V9$ Sv 88'098'6,$ VL959',$ 9Lv(;v'L$ £L"8,9$ 1717 89'LVL'6,$ V9'SV9',$ 88 LO£'L$ 66'809$ £17 (;6917(;'6,$ ,6 £09' ~$ 89 LO(;'L$ 179'009$ (;17 1791756'8,$ L56L5',$ 8V'L£,'L$ 6L"v65$ ,17 0(;U6'8,$ 0,9L5',$ 08'L80'L$ S9'06S$ 017 889VL'8,$ VC;(;9S',$ 805LO'L$ 65685$ 6£ 00'OU'8,$ 00095' ,$ 8nVO'L$ 6L"985$ 8£ 009£9'8,$ 00 £55',$ 89'(;68'9$ 6£ vL5$ L£ 90L,'8,$ 8(;'17,5' ,$ 0(;'86S'9$ S86VS$ 9£ 9,'996'L,$ 8,'L6V',$ 09"S(;(;'9$ 08'8,S$ S£ 8V,U'L,$ 6L"9LV',$ 9LU,'9$ 8V'£,5$ 17£ (;585S'9(;$ ,(;£ ,(;'(;$ 0(; LOL'L,$ 09"5LV' ,$ (;6',(;,'9$ 9, 'O,S$ ,~£) (;S9VS'9(;$ ,(;'(;,(;'(;$ 89'99S'L,$ 68'£917',$ (;,960'9$ ,080S$ £ (;5'V£S'9(;$ ,(;, ,(;'(;$ 9,'v(;£'L,$ 89 £1717' ,$ OvLLO'9$ 517'905$ ,£ (;S(;(;5'9(;$ ,(;0,(;'(;$ 00'S£9'9,$ 5(;'98£' ,$ 0(;9LL'S$ 50817$ O£ (;5 0~S'9(;$ ,(;'60(;'(;$ 8V'8VS'9,$ vO'6L£',$ 9(;U5'5$ vV"6Sv$ 6(; (;58617'9(;$ ,(;80(;'(;$ 9£'5175'9,$ 8L8L£' ,$ vC:'9L£'S$ (;081717$ 8(; (;S'98V'9(;$ ,(;'LO(;'(;$ 9S9(;V'9,$ 88'89£',$ 9nv,'S$ 8178(;17$ Lc: (;SVLv'9(;$ ,(;'90(;'(;$ 0968£'9,$ 0859£',$ 9S'L£,'S$ £,8(;17$ 9(; (;5'(;9v'9(;$ ,(;SO(;'(;$ 00'L6,'9,$ 5L6v£',$ 00'9£,'S$ 00'8(;17$ S(; (;S'OSv'9(;$ ,(;'VOa$ W6L6'5,$ (;9' ,££' ,$ OO',(;,'S$ SL"9(;V$ 17(; (;S'8£V'9(;$ ,(;'£Oa$ 178',65'5,$ (;£'66(;' ,$ (;,',OO'S$ 9L9,v$ £(; (;S9(;V'9(;$ ,(;'c;o(;'(;$ 0889S'S,$ OV'L6(;' ,$ 00 85L'V$ OS'96£$ (;(; (;S 17,17'9(;$ ,nO(;'(;$ 89'89(;'5,$ 6£'U(;',$ 88aV'V$ 6689£$ ,(; (;S'(;OV'9(;$ ,(;00(;'(;$ 178',O(;'S,$ (;8'99(;' ,$ 89L.v'v$ 17,'89£$ 0(; (;5'06£'9(;$ ,(;66,'(;$ 179'099'17,$ U,(;(;',$ U£L,'V$ ,8 Lv£$ 6, (;S 8L£'9(;$ ,(;86,'(;$ 09'58£'17,$ 08"86,' ,$ 8171786'£$ 170'(;££$ 8~ (;S'99£'9(;$ ,(; L6,'(;$ g~ g90'v,$ 8,U,',$ (;Svv6'£$ ,L9(;£$ L, (;SVS£'9(;$ ~(:96, '(:$ 9U66'£,$ £v'gg,',$ 1:~1:S8'£$ ,0 .1:£$ g. (;S'(;V£'9(;$ ,(;'56, '(;$ 178LV6'£,$ (;£'(;9,',$ 817LLL'£$ 6Lv,£$ 5, (;5'O££'g(;$ ,(;"176,'(;$ VV'£V8'£,$ (;9"£5 ~',$ U9,5'£$ 90"£6(;$ 17, (;5"8,£'9(;$ ,(;£6~ '(;$ (;£ 68L'£ ~$ •• 617,',$ (;S"V,£'£$ ,(;9L(;$ £, (;S'90£'9(;$ ,(;(;6~'(;$ 8v'O~L'£,$ 175"(;17,'~$ 01769(;'£$ 5VU(;$ (;, (;S'V6(;'9(;$ ,n6,'(;$ 80S85'£,$ 60'(;£, ',$ (;£",17(;'£$ "'Oa$ (;5(;8(;'9(;$ ,(; 06, '(;$ 0(; L95'£,$ 090£,\$ W9,L'(;$ L£9C:(;$ 0," (;S"Oa'9(;$ ,(;"68, '(;$ 8(;'£9v'£,$ 176",(;,',$ (;6"0,L'(;$ ,65(;(;$ 6 (;S'8S(;'9(;$ ,(;'88, '(;$ Og'(;££'£,$ 50' •• ,',$ 80"999'(;$ 178£(;(;$ 8 (;5'9v(;'g(;$ ,(;L8,'(;$ 00'9L8'(;,$ OO'£LO',$ 80'''9'(;$ 6S'n(;$ L (;S'V£(;'g(;$ ~(;98, '(;$ (;£ 66L'(;,$ ,9'990' ,$ 80' •• 9'(;$ 6S L,(;$ 9 (;5'(;(;(;'g(;$ ,(;'58,'(;$ 96'999'(;,$ 8S SSO',$ 80',,9'(;$ 6S L,(;$ 5 (;50,(;'9(;$ ~(;'V8, '(;$ 968,9'(;f$ 8S ,50' ,$ 80 »9'(;$ 6SD(;$ 17 (;S'86 ,'9(;$ ,(;'£8 ~'(;$ 9LD£'(;,$ 8179(;0',$ 80»9'(;$ 6SD(;$ £ W(;(;9'V5$ L8,55'v$ (;5'98,'9(;$ ,(;'(;8,'(;$ OV'(;90'(;,$ 0(; SOO',$ 80'»9'(;$ 6SD(;$ (; 1:SvvS'OS$ 170(;.(;'17$ 9£'680'L£$ 8L060'£$ (;S'VL,'9(;$ ,(;-.s, '(;$ UVC;O'(;,$ 90'(;00',$ 000017'(;$ 00"00(;$ , JeaA 4luoifli JeaA 4luoifli JeaA 4luoifli JeaA 4luoifli JeaA 4lUOifli 666'\7$ 666'£$ 666'1:$ 666',$ 666$ 000'\7$ 000'£$ 000'1:$ 000' ,$ ueld uorsuad uell!II!::> (eOO(;'Sf Alenuer!O se luawAed aaJlla~) SlN3If11A'VdNOISN3d AlHINOIfII:lO NMOO>i'V3~8

01'-IHL'V9$ OC:'f;~'S$ ~~/O~/90 vn'SLS' ~SS; l6'L6Z't$ v~/vOHO ZS'SV9'Lt$ ~WZ96'E$ £~IV~IZO C:£'£VS'Zt$ ~9'aLS'E$ n/so/~o U'Z99'Ot$ gs'aat'E$ v~1901H ""'Sl£'6£$ Z~'LLZ'E$ S~/9~1H ClQ'vo£'a£$ SO'Z6~'E$ Z~/9~19O OO'VOOtot$ tot'ove Z$ Z~/LOHO ZS'CZS'~£$ ~6'9Z9'Z$ Z~/90/VO 9Z'6WO£$ VS'Vts'Z$ £~/£ZlZO GG'H9'eZ$ v~'a9V'Z$ S~IH/sO VO'600'6Z$ lv'L~v'Z$ O~/IHIH 09 'Z9 ~'aC:$ SS'9Vt'Z$ v~/vOILO 9V'LVV'LZ$ SZ'L9z'Z$ O~/LZI£O OO'L£6'9Z$ SL'''''Z'Z$ mHO/VO 9~'9£6'9Z$ gg'vvz'Z$ !WLZI90 pg'6ve'9Z$ Lv'L£z'Z$ O~Jc:O/SO 09'9~S'9Z$ 06'60Z'Z$ 60/9ztSO 09'69V'9Z$ 09'SOz'Z$ SO/6zt90 OO'LatsZ$ SC:'LorZ$ O~Jc:OHO OZ'LV~'SZ$ 09'S60'Z$ £~/SztSO 9~'09S'VZ$ GG'9VO'Z$ 60/90/S0 9~'69t'vZ$ £V'Z£O'Z$ £~/6~HO SO'Qcz'vZ$ V8'S~O'Z$ SO/6zttO 9£'S96'£Z$ 9[966 ~$ t~Ht/SO snvL'tZ$ W9L6'~$ 90HOlZO OZ'SS9'tZ$ 09'vL6'~$ eomm VZ'OSZ'£Z$ ZS'Lt6'~$ 60H0I90 U'LOO'tZ$ ~n~6'~$ C:~I9Z1~O 9Z'Lt9'C:C:$ W999'~$ Z~IHM 08't6t'Zl$ S~'999'~$ Z~/O£/sO pg'tSZ'Zl$ Lt'vse'~$ O~/SZl90 90'Z9~'Zl$ ve'm'~$ Z~IZZISO ""'vSQ'Zl$ LlrL£S'~$ nlvzt90 9Z'09£'~l$ 69'~9L'~$ m/9zt~O OO'L££'~Z$ 6O'9LL'~$ Z~/O£/90 OZ'OLO'~l$ S9'SSL'~$ Z~/tOHO 9£'~LS'Ol$ 9Z'v~L'~$ v~/90/0~ GG'ZOv'S~$ se'9~9'~$ £~/SZlSO U'96Z'6~$ 9O'909'~$ 60Hzt~~ ""'LSO'S~$ Z~'90S'~$ l~/Szt60 ZS'ZSS'L~$ ~L'Z9V'~$ £~I9~/SO 08'O09'9~$ Ot'£et'~$ 601901L0 V8'VVO'9~$ LO'L£t'~$ nIH/so 9L'S8£'S~$ 8t'Z8t~$ O~/8(;.1S0 OZ'.lLt'v~$ o~'eS~'~$ 60HOM IOR'09l'v~$ Ov'SSn$ SO/S~/SO 9Z'OSL U$ el'6LS$ 90f£O/~0 tZ'I3~9'O~$ Zn06$ £~m/so ZS'S9L'm$ 9H68$ Z~/0£/90 VV'099'6$ Lt'tlS$ lHS~IZO OO'V9Q'6$ 00'ZZ9$ t~HO/VO Zt'n6'a$ ~9'C:VL$ nH£I90 ZS'~Ol'9$ 9V'£99$ IV~/OZl9o 9V'~£O'9$ 6C:'699$ z~mm gs'~orS$ t~'Slt$ I S~/v~ILO) ~u9WABd lU9WABd uo p&J!l9~ IBnUU\1 ~4~uo~ - 900C: tS!I UO!SU9d

vt>"S~£'6£$ ~nLt£$ 17 S~/9~n~ 9S 9nO~'S$ £ ~'SG'v$ S ~IV ~/LO SS 9~'9£6'9G'$ B9'vvG"~$ S~/a/90 VS B9'H9'6~$ 17~'B9V'G'$ S~/H/SO £S G'L'~99' 017$ 9S'BB£'£$ S v~/90m G'S 9£' ~LS'O~$ BG"v~n$ v~/90/0 ~ ~S 09'G'B ~'BG'$ SS'Bv£'G'$ v~/VOILO OS ~S' ~O~'B$ 9v'£B9$ v~/0~/90 617 vO'SLS' ~S$ G'6'Lst17$ v~/vono Bv 9£'SBS'£G'$ BLBS6' ~$ O~ £~H£/SO Lv onv ~'SG'$ 09'SSO'G'$ £ ~/SG'/SO 9v B9'G'Ov'S~$ SB'9~9' ~$ £ ~/SG'/SO SV ZS'ZSS'H$ ~L'Z9v' ~$ £ ~/B ~/SO tv VB'17vO'9~$ LO'L££' ~$ £~H~/SO £17 vG"B~B'O~$ G'S'~OS$ £~M/SO G'17 BZ'S~V'O£$ VS'v£S'G'$ £ ~/£Z/G'O ~17 G'!rSvS'L17$ 9V'G'9S'£$ £ ~/v ~/ZO OV 00'v9B'S$ OO'Z~B$ £~/~OlvO S£ 9~'SB£'vZ$ £17'(.'£O'Z$ £~/6~no B£ BZ'L£9'ZG'$ W9BB'~$ £~ Z~/H/n L£ BH£O'B$ 6G"S99$ UMm 9£ WL60'B~$ U'BOS'~$ G'~/SZ/SO S£ BO'L££' ~Z$ SO'BLL' ~$ Z~/0£/90 17£ ZS'S9L'0~$ 9n6B$ Z~/0£/90 ££ 09'17O£'B£$ SO'~6~'£$ (.'~/9~/90 Z£ 09'£6£'ZZ$ S ~'99B' ~$ (.'~/O£/SO ~£ BO'Z9 ~'ZG'$ vB'9vB' ~$ Z~/G'Z/SO O£ ZS'G'ZS' ~£$ ~S'9G'9'Z$ Z~/901V0 SZ WOBB'S$ L£'£ZB$ Z~/B ~/ZO BZ U'LOO'£Z$ ~£D6' ~$ U/BWO Ll BO'vBO'v£$ v£'OvB'Z$ G'~/LOHO 9Z OZ'OLO' ~~$ SB'SSL' ~$ Z~/£OHO SZ Zn~S'B$ ~9'ZvL$ 17 UH£/BO VZ Z£'£vS'Zv$ ~9'BLS'£$ ~~/60HO £Z OV'B~L'v9$ OZ'£S£'S$ ~~/O~/90 ZG' vV'vSO'G'G'$ LB'L£B'~$ ~~/vG'/90 ~Z vO'600'SZ$ ZvDV'Z$ B O~/B~m OZ v9'£SZ'G'Z$ H"vSB'~$ 0~/SZ/90 S~ 9L'SB£'S~$ Bv'ZBt ~$ O~/BG'/SO B~ v9'SvB'9Z$ LV'L£Z'Z$ O~/ZO/SO H 00'L£6'9Z$ SL'vvG"G'$ O~HOlvO 9~ Bv'Lt'v'LG'$ 6G"LBZ'Z$ o~/al£o S~ BZ'OB£' ~Z$ S9' ~BL' ~$ O~/BZ/~O v~ OO'LBZ'SZ$ Sl'LO~'Z$ O~/G'OHO £~ OZ'LL£'v~$ o ~'B6~' ~$ S 60HO/H G'~ ZL'96(."6~$ 90'909' ~$ sOlwn ~~ OZ'S69'£Z$ 09'vL6' ~$ 60H~/0~ O~ OlrB~S'9Z$ OS'SO(."l$ 60/91160 6 OB'09G"v~$ Ov'BB~' ~$ 60/6~/60 B 09'69V'9Z$ O!rsoG"Z$ 60/6G'/BO L 9~'09S'VG'$ B9'9vO'G'$ SO/90/BO 9 VZ' OSG"£G'$ zn£6' ~$ 60/~0/SO S OIr009'9~$ W£B£'~$ 60/BOILO v BO'9G'G"vZ$ VB'B ~O'G'$ £ BO/6G'/£0 £ BnvL'£Z$ WSL6' ~$ BonO/ZO G' BG"OSL' ~~$ 6~'6L6$ BO/£ono ~ ~uaWAed ~uawAed uo paJ!~a~ lenuuv Alll~UOVII S~/9~m - BOOl IS!I UO!suad

2017 Comprehensive Annual Financial Report jar the City oj Dover, Delaware Financial Section - Report of Independent Public Accountants - Part A fJ) QiftonLarsonAllen LL P CLAconnect.com CliftonLarsonAllen INDEPENDENT AUDITORS' REPORT The Honorable Mayor and Members of the City Council of Dover, Delaware Dover, Delaware Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business- type activities, each major fund, and the aggregate remaining fund information of the City of Dover, Delaware (the City), as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opInions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 16

2017 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section - Report of Independent Public Accountants - Part A The Honorable Mayor and Members of the City Council of Dover, Delaware Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2017, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter Change in Accounting Principle During the fiscal year ended June 30, 2017, the City adopted GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension and GASS Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. As a result of implementation, the City disclosed information and reported a restatement related to its Net Other Postemployment Benefits Liability as disclosed in Note 8 and 16. Our auditors' opinion was not modified with respect to the restatement. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, the General fund-schedule of revenues, expenditures, and cbanges in fund balance-budget and actual; the scbedules of changes in-net...pension liability, related rcatiosfOf the.opolice pensio pia Ad he general employee pension plan; the schedule of employer contribution to he police pensio plan and he ge~al employee pension plan, the schedul of the City of Dove' .[oportionat sh of the net pension liability for the county and municipal polic and firefighters pension plan; the schedule of the City of E>over's-contributionsfOF the county and municipal police and fi~ighteI§j)~on plan; andxthe schedule of changes in net OPES liability, related ratios for fffe OPEB plan~ndrschedule of City Contributions for the other post-employment plan be presented to supplement the basic financia~ statements. uch information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essentia part of financial reporting for placing the basic financial statements in an appropr'ate operational, economic, or historical context. We hav pplied certain limited procedures to the requi ed upplementa!y information in accordal1ce wiffi auCiifing standards generally accepted in the United Stj3tes of America, which consisted of inquiries of management about the methods of preparing the 'nformation and comparing the inform '0 for. GOnsistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statemenJs. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opInions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual fund schedules, budgetary comparison schedules and statistical section are presented for purposes of additional analySis and are not a required part of the basic financial statements. The combining and individual fund schedules and budgetary comparison schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting 17 ?I

2017 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section - Report of Independent Public Accountams - Part A The Honorable Mayor and Members of the City Council of Dover, Delaware and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund schedules and budgetary comparison schedules is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. CliftonLarsonAllen LLP Baltimore, Maryland January 31, 2018 18 32

6~O~ O£ das >6~0~ O£ unr 6~0~ ~£ Je11'II 9~0~ ~£ oaa 9~O~ O£ das >9~O~ O£ unr %~OO~ 6L9'v~v$ UL'699'~v$ 9~0~ ~£ Je11'II %~9°£ 9v~'61.9'~$ £69'v L~' ~v$ no~ ~£ oaa %vOOO- ~60'9L$- LV9'99L'6£$ no~ das O£ %O6°~~ ~OO'O£~'v$ %O£Ov £96'L£9' ~$ 6£L' ~LL '6£$ >no~ unr O£ %UOv ~9£'O~9' ~$ 99L'££ L'9£$ no~ Je11'II ~£ %O~OO- 9v9'vL$- 96£'£G9'9£$ 9WG oaa L£ %9Go£ £09'99L'L$ Lvt969'9£$ 9~OG O£ das %£9°0 £OG'LG~$ %99°9 Ive:o'696' L$ 9£L'Lv9'9£$ > 9LOe: O£ unr %££°0- £L6'~LL$- vLL'e:L9'££$ 9~0e: L£ Je11'II %L6°L 6LO'099$ LG9'v99'££$ 9~O~ ~£ oaa %Lv09- L86'S8~'~$- 8VS'V£O'££$ SLO~ O£ das %69°Z £~~{L69$ %£9°L L9~'£09'Z$ 9£S'OG£'9£$ > SLOZ O£ unr %S6°V- 68L'LOL'L$- V8£'L L9'~£$ 9LO~ L£ Je11'II %vOO£ L09'6LO'L$ £L ~'SG9 '17£$ vLOZ oaa L£ %99°~- 9v9'£~6$- 99£'909'££$ v~OZ O£ das %LLO£L 690'99L'V$ %L6°v 8Z9'LL9'L$ Z L6'8Gt;.'t;.£$ unr > vLO~ O£ %LLOO 9179'99$ v8£'L L9'Z£$ vLOe: L£ Je11'II %66°S 989'098' L$ 6£L' L9L'~£$ £L6e: L£ oaa %17LO~ OO~'9v9$ £90' L~6'O£$ £L6~ O£ das %99°L£ OO£'6LG'9$ %99°L~ L90'89£'9$ £SS'Z9tO£$ >£L6Z unr O£ %S~OL ££9'£9Z$ 98L'v6S'vZ$ £LOZ L£ Je11'II %9vOL- 888'99£$- £SL'L~9'vZ$ ~~Oe: L£ oaa %(;9°£~ 98v'£66 '(;$ L17O'LL6'v(;$ (;LO(; O£ das %9LOO- £ L£'v£$- £S9'£96' LZ$ > ZLOZ O£ unr 999'L ~O'Z(;$ Z~O~ L£ Je11'II % a6ue48 a6ue48% a6ue48 JO S8 aouelea Jea" Aea ol1'II lenuuy lenuuy °3leJaua8 uew!II!1I'II - JOllu0lI'IIlUawls9J\ul AIJ9lJeno

0$ LL9'H$- 1796'(;99'17$ 6LL'09£'v$ 9L~ '(;0(;$ 99£'699$- 9VO'9VL'£$ L99'9L9'(;$ 0$ L99'9L9'(;$ HO(; 9~ 0$ OVO'9~$- ~Lv'(;90'~$ ~£~'099$ 017£'(;0(;$ 9~9'9(;9$- 9(;(;'9 ~L'£$ 6W690'£$ 00L'(;v9$ 60L'9v(;'(;$ 9~0(; v~ 0$ (;6L'9~$- 9£v'v9~H 696'1796$ 9W60(;$ 0££'09(;$- (;VB'669'£$ (;~9'6W£$ 000'8179$ (;~9'9L9'(;$ 9~0(; 8~ 9L£'0(;$- 96(;'9~$- 0~9'OOC'V$ 096'9v~'v$ 099'~~(;$ (;90'~9~$- 9~9'889'8$ 9EL'(;Lv '8$ 00L'V6~ '8$ OCO'9a$ V~O(; (;~ £~9'09$- 09(;'~(;$- Ovn96'~$ 8v(;'~9D$ L60'88(;$ (;06'~8£'9$ ~99'99v'£$ 89v'99L'6$ 009'LLv'6$ 896'0~8$ £~O(; ~~ v9£'60~$- 6v~'9~$- ~O~'va$ ~66'v$- (;60'6L(;$ VV6'90~$- 9L9'6v<::'8$ v86'£v~ '8$ 006'69L'(;$ 1780'1798$ (;~O(; O~ vL£'O~$- OL9'9(;$- 0(;<::'~L9$ VL9'LL8$ 9179'86(;$ ~99'69(;$ LL9'LLO'8$ 9z:L'Lv£'8$ 9917'(;86'(;$ 8L<::'9~v$ ~~O(; 6 996'98$- L9£'9(;$- 90£'99(;'(;$ 60L'896'~$ 669'176(;$ 99L'~99$- 99£'(;86'(;$ £(;9'OL(;'(;$ 0$ 8(;9'OL(;'(;$ O~O(; 9 H9'68$- £176'(;(;$- 99(;'£99' ~$- 89v'(;H'(;$- 96~'608$ 69£'9(;(;$- (;9L'9~L'(;$ 868' ~6v'(;$ 0$ 868'~6v'(;$ 600(; L 808'9~$- 60~'(;(;$- 99v'OL9$- vOn9 ~'~ $- 9~9'99(;$ Lv9'L(;(;$ 889'099'(;$ 090'906'(;$ 000'9(;9$ 090'89£'(;$ 900(; 9 609'9(;$- OLO'(;(;$- 699'996'(;$ ~99'999'(;$ 9~L'L9(;$ 909'9~v$ 08L'098 '(;$ 989'9LL'(;$ (;17(;'899$ 86<::'860'(;$ LOO(; 9 9~(;'09$- 009'6~$- 8(;6'889'~$ 96v'vL9' ~$ av'69(;$ 999'696$- OL9'969'(;$ (;99'98n$ 0$ (;99'98D$ 900(; 17 (;6V'9~$- 0£9'6~$- OL9'L~0'~$ ~9v'(;9L$ 60(;'99(;$ £86'99L$- 9LL"V98 '(;$ 9v9'999'~$ 0$ 9179'999' ~$ 900(; 8 088'9$- 9(;~'9~$- 6~L'9W~$ 669'96~'~$ 0(;9'617(;$ 69n9~'~$- 69<::'8(;<::'(;$ OLv'~vO'~$ 0$ OLv'~vo'~$ 1700(; (; (;917'9$- v6v'9~$- 900'99$- vL8'(;(;8$- 998"L8(;$ (;6nH'~$- (;0<::'8LO'(;$ 0~6' ~v6$ 000'0£8$ 0~6' ~~9$ £00(; ~ luawlsaAul awooul uOllnqujuo8 N011n81~lN08 18j01 wnsdwnl paseq 1I0JAed spun!a~ ·!WPV + aAoldw3 jUaWjSaAUI jaN aaAoldw3 AlI813N paAed UO!suad uO!lnquluoo Al!8 uO!jnqujuoo Aj!8 uOljnqpjuoo Aj!8

0 £- 9- 9- ~~- l- ll- O~- ~~ 6~ -- 09- ~££ ~££ ~££ O~£ ~£ LS£ 6S£ ~g£ ~6£ 09£ ~9£ 1'11'101 ---- 0 ~ 0 ~- l 0 ~ 0 0 ~ 9 6~ 6~ S~ S~ 9~ ~~ ~~ £~ £~ £~ U pelssl'I pSJJSjSa L- g- 6- O~- g~- g~- 9~- l~- ~ 9l S6- g~ £l ~£ OV OS gg £B 66 ~~~ OU ~e palset\-uoN - ssaAoldwe a)\110'l L ~ £ L g- £~- U L- 0 6- l ~6 vB £B oe £L ~g ~6 lB 69 69 96 paJsat\ Ann.::! • sasAoldws SI'I110'1 0 0 0 l- £~ 9l 6~· 6 O~ ~ Ll SOl SOl 90l 90l LOl v6~ B9~ LB~ 9H B9~ L9~ sJ~suaq f:lU!I'I!90aJAJluaJJnosa!Je!O~susq pue peJ!l9H HOl HOl 9~Ol g~OZ ~~Ol £~Ol UOl nOl O~Ol 600l BOOl LOOZ OJ (d)600l -_ a6uel!O 'lI0£ eunr )jeaa lunoO d!l!SJaqw91/1JUO!SU9d

I V~"B9S' ~S$ OO'Ooo'OvZ$ I J vv'e9S' ~6G$ OO'OOO'Z~$ %9B"G BLZv£$ £L~Bv'H$ Ol OO'OOO'l~$ %OB'2: 90'9££$ SS'B£~Jn$ S~ OO'OOO'Z~$ %SL'c LV'Sl£$ OS'lOB'9~$ B~ OO'OOO'G~$ %S9'(;, ~O'£l£$ £V'£LvJ9~$ L~ OO'OOO'l~$ %v~r(;' L9'9~£$ lv'OS~J9~$ OO'OOO'l~$ m %SS'2: LV'O~£$ SL'££B'9~$ g~ OO'OOO'l~$ %VS-z B£'vO£$ Bl'£c9'g~$ v~ OO'OOO'G~$ %SVG ~v'BSG$ OS'B~tS~$ £~ OO'OOO'l~$ %1717'2: gg'lSl$ 6v'Ol6'v~$ U OO'OOO'l~$ %6£'2: lB'9Bl$ £6'Ll9'v~$ ~~ OO'OOO'Z~$ %V£.(;' Ol'~Bl$ ~~'~V£'V~$ O~ OO'OOO'l~$ %O£'Z eg'ga$ ~6'690'v~$ 6 OO'OOO'l~$ %SZ'Z Bl'OLl$ £z'veL'£~$ e OO'OOO'Z~$ %~l'Z BS'v9l$ , SS'£~S'£~$ L OO'ooO'G~$ 1%9~'l BL'SSl$ LS'BVl'£~$ 9 'OO'OOO'l~$ I I%l~'l 69'V9l$ S~'SB6'G~$ S 00 OOO'l~$ %BO'Z OL'Svl$ OS'V£L'l~$ 17 OO'ooO'l~$ %vO'Z OB'vvl$ Oe'VBv'U$ £ OO'ooO'l~$ i%OO'l OO'Ovl$ OO'OVG'G~$ G OO'OOO'G~$ I . OO'OOO'U$ ~ I [ l , , I I aseaJOU! Qui aseaJOU! %1 eseaJOU! %Z!

COLA History January 1,1983 less than 3 years 0% 3 to 15 years 5.7% more than 15 years 10.5% -; Julyl, 1986 all retirees 2% L_ July 1, 1988 all retirees prior to 6/30/88 5% t July 1, 1989 all retirees prior to 6/30/89 2% ~ 1993 $60/year - max $600 0% based on years of service ;J' July 1, 1996 years of service & pension amount - minimum $100 L.t' July 1, 2000 all retirees $20 per month _ increase minimum monthly amount to $200 .2 July 1, 2002 all retirees prior to 2% December 31, 2000 I July 1, 2003 all retirees 1.5% ~ July 1, 2005 all retirees prior to 2% December 31, 2004 I June 26, 2006 all retirees prior to 1% Janual)' 1, 2006 I July 2007 None - $75,00 set aside for July 2008 I)_ 2. 0 i '8. :J. /16 ~J

The goal of fulling funding the Defined Benefit Plan should be a high priority, it would be very reassuring to the members of the plan to know what that value is and when will be reached. In 2003 the pension payment was $2,073,202 with a fund balance of $14,446,848 in 2017 the pension payment was $3,746,045with a fund balance of $39,365,436. The fund balance went up $24,918,588 while the annual payment went up $1,672,843 At a Council Workshop November 3, 2008 a plan was presented to Amortize a $24,4518,821 Unfunded Liability for the Civilian Pension Plan totaling $41,890,827 - Increasing plan or $39,757,357for a Level plan. In January 24, 2017 a report by nyhart listed the unfunded liability for July 2014 as $25,452,793 and the July 2016 as $22,060,391. I would like to make two request: City Council be provided with a listing of all current retirees without names - listed in order of monthly payment lowest to highest, with status SS or GE, age and date of retirement. This would provide an understanding of the people involved. The current amount of the unfunded liability and the plan to fund it.

· " ~ I\) ~ ~ ~ ei OD -.j Ol <11 WI\) ~ z 0 '";0 0 ""m z i ~ if 9} ~ ~ ~ :f :3 ~ ~~ !!!. ::J !!!. '!:!. ~B II> ill !!! !.ar 2-::J 0 Q. ;a> 0 '" '" t5II> ~ 'Qj 88 II> II> ! "'0 ~ aa f :=~:3 II> ,r ..,So 0. C) ~. 6: !!46: ~ 5. 3- !i I ::J ~ II> '"3 '" 8. ""cr ::J 0 rTs;;. 30. CD _. m, So (I) tr 0 ::J !l ::r III Ii c)" ::Jao () Q. .z ::J Q) il cj" l~ ~ o ::J -0 ~G> 3' :i" •• ::J a ~ ~. 0 6' ::J I t5 ~ ~ III ::J ." m, z s 1...., §iil c:...(I) ~. [ II> § 0 !a- c)" c 3 c ii1 .5 (I) ~ ::J ::J 3'<'" <II ~ - 5' Z s: "D a !!. <T ~ Ii i l:!~ 3 •• I~~. ~ 0 lit [ ::J ::J ~. Q) ~ :l ~ ~ <! ~ ~ <11 I\) .N ~ ••• ••• .:. "" i\J OD ••• W '£ j ~ j ~OD ~ ,~ ~ ~~ f:l !::! w -.j I~ ti J>. ~ ~ ~ ~ ~ ~ ~ •.. f•.. §* .•. J~~ II'> .N I\) •.. N •.. ~ !: "" "" •.....• ~ ,w ~ """ i... w m ~ ~& 1ll ~ ~ ~ -:r. ~ :::! ~ ~ ;:j -.j ~ ~ ~ m I~ ~I;;' 18 ~ ~, •.. !: '" .~ .z. •.. •.. .N •.. I\) •.. .N •.. !: •.. ~ ~CD ~ U) ~ OJ ~ ! ~ in -:r. ~ 8! ~ I\) ,-~ .~ ~ '" ~ ,Ie <11 ~ ~ '"!ll 111 ,~ ,!C ~ §'tol !: ~ •.. •.. •.. UI A •.. ,I\) I\) W ~ ~ in -.j :::l ~ •.. I\) -.." !!l ,ID (1) §! ~ 18 ,~ N N '<11 "" - ~~ ~ ~ iD i ,;:; g 113 ~ ",g: 0 ~ §J>. •.. ••• I\) i•.. <11 •..cD ~ '"w .N ••• .N ••• .N••• § ~ (1) ~ w ~ ••• f:Jl •••I::l ~ j (:) ~ ~ } ~ §l ~ ~ 12! ~ I~ ::t ,~If ~ ~<11 '''' ••• !: , I\) I\) cD CD ••• .N ••• ••• ••• ~ ~,I\) tl :::! ••• ~ ,<11 :::J (1) •.. ,I::l•.. iii ~ ~ •••.z. ~ tl1~ ai -,J ~ a. W ~Ol ~ ! I~ ! ~ .[ ~ n~ ~ ;» §i ~ ~ ••• I\) •.. /n I\) m cD .:.!'l ~ ••• •.. ••• ~ ::t ••• '"~, ~ ~ § ~ fZ I::l Ol ~ ~ ~ ,-.) :f'" i::l ~ ~ -.." :... :... J>. ~ ~ :::l I\) ...." I~ II:!! &! ~ ~'~ ~ ~-.j ~ ~ ~ ••• ••• ~ ,~ ,N N r j1 ••• ••• ~ ~ ~ 1§ ~ f:Jl ~ ~ ~ ~ '~ '~ ~ ~ ~ ~ 'iii ~ ~ ~ lit! ~ I'~ OOD ~-.j •••A •••W ••• ...." ••• ••• ,I\)r ~ •••W ,w :... ~ :::l ~ ~ "8 ..•.. ..• .•••0 .Ill••• ...." ~~ .1\)91 0> to) -.j i m ";:t ~ ~ ~ ~ ~ A ~ ~ "'ID '" ; l m~ ••• •••w ••• ,I\) ••• •..I::l •..I::l ••• ~ ••• .~ ••• '" ~ '~ ~ -.j "& ~ ~ g ~~ ~ a. -.j '~ •.. ~ 18 ~ ~'~ ;:; len ~ 01) I~ ~ ~ ~ ~ I~ '~..." ~ ••• •.. •••W ••• ~ ~ I::l ••• to •••W ~ ,ID ••• -:r. ••• AW ~ ~A ~ § •••~ ~ ~ W :::lei ~ i ~ •.. ~~ ~ ~ ~ t ~ ~ ~ W ...~ ~ I~ ~~ ~ W'" ~ ~ J>. ••• ••• 5" •••W •.. -.j ••• 5" ••• ••• ,J>. ~ ••• ~ ••• -til <11 ~to ~Rl 2! ~w 0> ~ ~ ~Q) & g '~ ! '~~ t::! ~ Iil! OJ ~ IcD I~ § ~ ~;;J •.. ••• ••• III ~ •.. •••w t:: ,A '~ ~ ~ •.. E~ ••• ~ ~ .01 ~ ~ ~ ~ .~ t::! '" ~ § .. to) ~ lIB ,~ ~ -.j §I~ ~ ..... (IIW , tl ~ <11 ... W It:\ r i ... ••• -.." !: ~ :... ••• •.. j ~ ~ ~ a> (1) ~ 1\)8; 2 i~ in ~ t::! .§ ~ ai ~ !~ ~ ~I~ ~ I;:; ~ *

.•.. W N :::::: a to Ol -,J m ()1 ~ WI\) ..• z () :;0 (j') i !ll. ::J" ~ (D lD ~ at m Q~ z -i ;;, ::J ~ 3 ~ 2 III Dl ~ t:' (D (1) [ "tl (II IA ..::l 10 ::l ~ 0' -<""" :;r !a (D 0 Q. ;;!! 8 9 -<TO ~ ;;; (/I ~ ~ ""tD :::I 2- t: .,Ii a .,E1. 1ll? (D =t ::l, :l' C. I ~ "0 tD 3 ~ 0 i7[ [~IE.., a. co IJ 0 ::J 3~ ::J 8 ~~ ~I ::l S' m 0 3- 3: 0' ia g. e.G) m !i ::1 e. 01 U> '"0' 6: g ::l -::1 s' :or TO '"0'::J j[ ~g OJ I I ~. ~ 10 Z '"::1 0 0 ::r. -"0 8'" ~' ! 0 a '" !ll. 'l' •• t: III 3 ~E1. ;;, ., 3 ~ ::J 3'"' m iil "C Z "C 0 !ll. 6' C f '" 0' t: = » (II 5- ;;; 3 Q) ~~.0 III :::l ::J '" l ~ !!.l ltl W •••w •••W •••'" I if> .1\) ••• J>, ••• ~ -...., !l! O!~ -:,.. 0> 3 ffi m ~ '" m ~ .0> 01 ~ -,J ~ t:l I ~ .1\) m -.•.. -", -", ~ a I~ I-~ I\) '" ~ ~ I\) •••0 -,J ~I~ a ~ -,J'" ~..• ! Ul ~ () ::T 01 :::I co (D S' if> if> fA ~ ~ •••0 I~ I~ I~ 0 I~ 0 0 I~ I~ I!t' I!t' m l •. , :::I r5. :::I I I\) •... if> ••• fA fA ~ 0 •••0 •••0 0 0 0 •••0 00 0 ~w .,. ••• ~ '"0 .,. ••• if> •... 0 0 0 •••0 •••0 •••0 •••0 •••0 •••0 ~~ 0 ~ .•.. jt! •... ~ I~ .~ ~ ~ '"0 0 •••0 ••• 0 I~ ~ I~ ~OI ~ •... •... .,. ~ co 0 .,. •... ••• 0 0 0 0 ••• •••0 0 0 •••0 00 •••••• •••0 ~m m ~ 0 I~ •••0 •... 0 •••0 .,. 0 I~ I~ •••0 ~I!t' I!t' §I- I\) •... 0 0 ••• ~ ~ •••0 :t ~ li! •... ~O> ~ ~~ 0 I ~ ts ts ts ts ts ts ~ ~ ~ tl~ ~ b!"" ~ ~ I~ ~ •... 0 I~ ~ .~ I~ I~ I~ ~I~ '"0 I\) 0 1\) ••• .,. 0 ••• 0 •.. 0 ••• 0 •••0 ••• 0 ~ ••• 0 ••• 0 •••••• 00 •••0 -,J'" ••• ••• ••• ....•.• fA I\) ~ ~ 0 •••0 0 0 •••0 •••0 ••• 0 00 0 I~~ ..• I~ I~ Ij!!! I~ ••• a Ij!!' ~ ~ 11tl Ijt! 1Il ~ I~ :;:'; •.. ••• ••• a 0 a ••• 0 .... 0 ••• 0 .... 0 ••• 0 00 •••••• ••• 0 I~.•....• '"0

City of Dover Council Workshop November 3, 2008 - 7:30 p.m. - AGENDA Defined Benefit Pension Plan

City of Dover Pension Plan Presentation November 3, 2008 Existing Plans Defined Benefit Plan or 401a Money Purchase Plan Yes Close Defined No Pros Cons Yes No Pros Cons Cost 2

City of Dover Civilian Pension Plans Features General Employee Pension Plan Inception Date: July 1,1967 Type: Defined Benefit Plan Ownership: City of Dover - Pension Trust Fund Cost of Living Adjustments: Not provided for in Pension Ordinance; There is a history of prior COLA recommendations by Board of Trustees and approval by Council; Motion to discuss Ad Hoc COLA each January; Investment Management: Pension Board of Trustees and Asset Management Advisor Investment & Non-Investment Risk: City of Dover Employee Contributions Required: Yes, Effective 7/1/83 Employee Contribution Percentage: 3 ~ % of gross salary, exclusive of unscheduled overtime City Contribution: Actuarially Determined; 4.12% Normal Cost & 22.92% Unfunded Liability Vesting Requirement: Yes, 10 years Participation: Active Employees - 199 Retired/Disabled Employees -172 Vested - 13 Retirement Eligibility: Prior to May 1, 1994 Age 65 with 10 years of continuous service Age 50 with 20 years of continuous service Any age with 25 years of continuous service On or After May 1, 1994 Age 65 with 10 years of continuous service Age 55 & years of continuous service is equal to or greater than 80 Reduced benefit Age 55 with 10 years of continuous service Accounting Requirements: Actuarial Analysis and Recognition of Unfunded Liabilities Money Purchase Plan -Internal Revenue Code 401a Inception Date: July 1, 2000 Type: IRC401a Plan Ownership: Employee or Retiree Investment Management: Employee and Asset Management Advisor Investment & Non-Investment Risk: Employee or Retiree Employee Contributions Required: Yes Employee Contribution Percentage: 3% of gross salary, exclusive of unscheduled overtime City Contribution: 3% of gross salary, exclusive of unscheduled overtime Additional City Contribution: If the employee contributes to the 457 Deferred Compensation Plan, the City will also provide an additional match up to 3%; bringing the total contribution up to 6% Vesting Requirement: None Partici pation: Active Employees - 80 Retired Employees - 3 Retirement Eligibility: Same as General Pension Plan Accounting Requirements: None; Employee Owned 3

City of Dover Defined Benefit Plan Actuary Analysis Accounting rules require that each owner of a Defined Benefit Pension Plan conduct an actuarial analysis no less than every two years to determine the funding level needed to provide all participants in the pension plan the benefits promised over their lifetime. This applies to active and retired employees. In order to conduct the analysis, the Actuary makes certain assumptions as follows: Assumptions - Valuation Date: Each analysis is as of a point in time - July 1 each year Employee Contribution: 3 Y2% Employer Contribution: Percentage provided in last actuarial analysis Inflation rate: 3 Y2% Projected salary increases: 4 Y2% Investment rate of return: 7 Y2% Mortality Table: 1993 Group Annuity Mortality Table Retirement Years: Takes into consideration hire date and retirement eligibility for each employee based on plan provisions After the liability calculation is completed, the Actuary then compares the amount to value of the investments held by the Pension Trust. The difference between the value of the investments and the Actuarial Accrued Liability (AAL) is the Unfunded Liability. This is summarized below for 7/1/08. Actuarial Accrued Liability $43,800,212 Market Value of Assets $18,325,764 Deferred Loss (Gain) 1,055,627 (see Note 1) Adjusted Market Value of Assets $19,381,391 Unfunded Actuarial Liability $24,418,821 Funding Ratio 41.84% (see Note 2) Note 1- The accounting standards permit you to spread gains greater than the actuarial assumption (7.5%) or losses over a five year period. This past year resulted in investment losses and the Deferred Loss (Gain) includes one fifth of the loss. Note 2 - The Funding ratio is the Market Value of the Assets divided by the Actuarial Accrued Liability. 100% is a fully funded plan. This plan is less than 50% funded. In order for the City to '\ keep its promise to plan participants it should strive to get the plan fully funded. 4

City of Dover Civilian Pension Plans Pros and Cons of Cost of Living Increases PROS );;> Inflationary adjustment to current benefit );;> Retiree morale and goodwill CONS );;> Ability to fully fund a Pension COLA in the budget o City Actuary recommends if COLA's continue they be fully funded due to the size of the unfunded liability; Current estimate for a 2% COLA is $595,000, however the calculation is based on meeting the assumptions each year; );;> Unfunded liability will increase if the actuarial assumptions are not met each year );;> Concern of lack of fairness to participants in the 401a Plan as COLA's are not a feature of their plan; Expectation to provide COLA to the 401a Plan participants; Pros and Cons of Closing Defined Benefit Plan PROS );;> Reduce investment risk o If we don't meet the 7.5% rate of return investment assumption, the City's cost and unfunded liability increases );;> Reduce non-investment risk o Higher than assumed pay increases o Mortality - participants living longer than mortality tables o Retirement's sooner than assumed );;> Eventual elimination of unfunded liability and annual amortization of the unfunded liability }i;> Annual budget requirements for the unfunded liability would no longer be necessary, once the plan is fully funded. Current Budget Requirement $1,969,580 for unfunded liability. );;> Reduction of liability would enhance bond ratings CONS );;> Employer normal cost contribution up to 6% for 401a Plan versus 4.12% for Defined Benefit Plan }i;> Recruitment; Defined Benefit Plans are traditionally governmental plans );;> No vesting requirement may lead to higher turnover );;> The liability has to be spread evenly over the amortization period for a closed plan. An open plan allows the City to increase the cost by 3 Yz % each year. The City's cost will increase the first 8 years and decrease in Year 9 and forward. (Details on following page) 5

9 9I 51 t1 n Z1 11 01 6 8 L 9 5 17 f 7_ 1 , _L -'- - 0$ 000'005$ OOO'OOO'TS 000'00')'1$ ~lI!Sl:'aJ_)lIl - OOO'OOO'<:S OOO'OOO'~$ OOO'OO,)'f$ 000'000'17$ Lg£'LgL'6£$ Ll8'068' ~V$ 18l01. g£8'v8v'l$ gOg'gv£'£$ vlOl g~ g£8'v8v'l$ g£v'££l'£$ £lOl g~ g£8'v8v'l$ ~60'vl~'£$ llOl v~ g£8'v8v'l$ gvv'8~O'£$ ~lOl £~ g£8'v8v'l$ £L£'9~6'l$ OlOl l~ g£8'v8v'l$ ~gL'L~8'l$ 6~Ol ~~ g£8'v8v'l$ ggv'llL'l$ 8~Ol O~ g£8'v8v'l$ ~Ov'O£9'l$ L~Ol 6 g£8'v8v'l$ Ogv'~vg'l$ 9~Ol 8 g£8'v8v'l$ 80g'ggv'l$ g~Ol L g£8'v8v'l$ ~Lv'lL£'l$ v~Ol 9 g£8'v8v'l$ £vl'l6l'l$ £~Ol g g£8'v8v'l$ LlL'v~l'l$ l~Ol v g£8'v8v'l$ SS8'6S~'l$ ~~Ol £ g£8'v8v'l$ ~Lv'L9O'l$ O~Ol l gS8'v8v'l$ Lgg'L66' ~$ 600l ~ uOllezrl-JOW" uOIJezll,lOW" unr-o£ JeliOa 6u!seaJ:>ul 6u!PU3 laJ\al JeaA Al!l!qen papunjU ~Z8'8~t'tZ$ az!l,IOw" OJsluawAed lenuu" ------ Aoot sueld UO!sUad UemA!) JaAOa JO A~!)

MANAGEMENT SUMMARY City of Dover, Delaware General Employee and Police Pension Plans

; Certification This report was prepared for the City of Dover to summarize the results of the 7/1/2016 funding valuations and the GASB67 & 68 accounting reports as of June 30, 2016, and may not be appropriate for other uses. Please contact Nyhart prior to disclosing this report to any other party or relying on its content for any purpose other than the intended use. Except where indicated otherwise, the funding results included in this report are based on the same data, assumptions, methods, and plan provisions as the 7/1/2016 funding valuations. As a result, these sections of the 2016 funding reports dated 12/30/2016 should be considered part of this report. Accounting results are based on the same data, assumptions, methods and plan provisions as described in the 6/30/2016 GASB67 & 68 reports. As a result, these sections of the GASB67 & 68 report dated 10/4/2016 and 9/23/2016 should be considered part of this report. This report has been prepared in accordance with generally accepted actuarial principles and practice. The undersigned are compliant with the continuing education requirements of the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States. ~Cl./lJ~ Carter M. Angell, FSA, EA, MAAA Elizabeth A. Wiley, ASA 2

New actuary A lot of changes Audit of previous results for funding and accounting Fresh look at where things are and where they are going

Transition to Nyhart JoO ~ General Employees ,,'.,"', , .. ";Measurements as of 7/1/2014 Prior Actuary Nyhart $ Difference % Difference ~" ., ,." "'I.' • Actuarial Accrued Liability $58,278,646 $57,854,095 ($424,551) (0.7%) Employer Normal Cost $253,709 $237,390 ($16,319) (6.4%) Employee Normal Cost $199,958 $203,725 $3,767 1.9% PYE2016 Contribution $2,983,776 $2,914,643 ($69,133) (2.3%) • Nyhart was able to match key measurements within a reasonable range, and did not identify any pension plan provisions which were not captured or were valued inappropriately. • For the conversion, Nyhart reviewed data, plan provisions, & assumptions summarized by the prior actuary in the 7/1/2014 valuation report. 4

Valuation Results Recommended Contribution V') 4,000 "'0 c ~ 3,000 $188 :::l $172 o ~ 2,000 $2,542 $2,420 1,000 o --$2.~-- -~-~232.---.. 7/1/2014 7/1/2016 • ER Normal Cost • Amortization Interest 7'"1/20:16 Accrued Liability $58,278,646 $58,851,782 Actuarial Value of 36,791,391 J~/(ytf) 73~ 32,825,853 Assets Unfunded Liability 25,452,793 22,060,391 Funded Percentage 56.3% 62.5% Recommended $2,983,776 $2,824,098 Contribution 5

( ; GASB 67, 68 Accounting Results - General Employees 6/30/2016 Total pension liability (TPL) 58,673,000 58,807,821 Plan fiduciary net position (35,290,922) (35,698,537) Net pension liability 23,382,078 23,109,284 Ratio of plan fiduciary net position to TPL 60.15% 60.70% • The net pension liability decreased from 201Sto 2016. • $1,43S,000 expected decrease • $267,000 decrease due to demographic gains • $1,429,000 increase due to asset underperformance (Le. return of 2.4%vs. expectation of 6.S0%) 6

~ GASB 67, 68 Accounting Results - General Employees Service Cost $458,969 $401,218 Interest on TPL 3,861,154 3,718,982 Projected earnings on investments (2,406,707) (2,279,528) Employee contributions (209,446) (202,340) Administrative expense 18,792 16,040 Recognition of deferred outflows/{inflows)* $716,377 935,467 Pension Expense $2,439,139 $2,589,839 The expense was $219,000 higher than anticipated. The increase was largely due to the $1.4 million loss on asset performance, which ACTUARY'S caused a $286,000 increase in expense (as the loss is amortized over 5 years). This loss was offset by demographic gains which lowered COMMENT expense by $67,000. * The recognition of deferred outflows/(inflows) includes charges due to differences between expected and actual experience in measurement of the TPL, changes of assumptions, and differences between projected and actual earnings on pension plan investments 7