CCW PACKET

COUNCIL COMMITTEE OF THE WHOLE AGENDA JANUARY 15, 2019 - 6:00 P.M. CITY HALL COUNCIL CHAMBERS - 15 LOOCKERMAN PLAZA, DOVER, DELAWARE PUBLIC COMMENTS ARE WELCOMED ON ANY ITEM AND WILL BE PERMITTED AT APPROPRIATE TIMES. WHEN POSSIBLE, PLEASE NOTIFY THE CITY CLERK (736-7008 OR E-MAIL AT CITYCLERK@DOVER.DE.US) SHOULD YOU WISH TO BE RECOGNIZED. PARKS, RECREATION, AND COMMUNITY ENHANCEMENT COMMITTEE AGENDA ADDITIONS/DELETIONS 1. PRESENTATION - INCLUSIVE PLAYGROUNDS (COMMITTEE ACTION NOT REQUIRED) 2. ADJOURNMENT OF PARKS, RECREATION, AND COMMUNITY ENHANCEMENT COMMITTEE MEETING UTILITY COMMITTEE AGENDA ADDITIONS/DELETIONS 1. EVALUATION OF PROPOSALS - TREE TRIMMING (STAFF RECOMMENDS AWARDING A CONTRACT TO ASPLUNDH TREE EXPERT LLC AS PER THE PROPOSAL SUBMITTED IN RESPONSE TO RFP #19-001EL) 2. ADJOURNMENT OF UTILITY COMMITTEE MEETING LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE AGENDA ADDITIONS/DELETIONS 1. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING JUNE 30, 2018 (STAFF RECOMMENDS ACCEPTANCE OF THE REPORT) 2. COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) FOR THE FISCAL YEAR ENDING JUNE 30, 2018 (STAFF RECOMMENDS ACCEPTANCE OF THE REPORT) 3. PROPOSED ORDINANCE #2019-02 - AMENDING CHAPTER 70 - OFFENSES AND MISCELLANEOUS PROVISIONS, SECTION 70-7 - REGISTERED SEXUAL OFFENDERS (STAFF RECOMMENDS ADOPTION OF THE ORDINANCE) 4. ADJOURNMENT OF LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE MEETING ADJOURNMENT OF THE COUNCIL COMMITTEE OF THE WHOLE MEETING /TM S:\AGENDAS-MINUTES-PACKETS-PRESENTATIONS-ATT&EXH\COMMITTEE-AGENDAS\2019\01-15-2019 CCW AGENDA.WPD THE AGENDA ITEMS AS LISTED MAY NOT BE CONSIDERED IN SEQUENCE. PURSUANT TO 29 DEL. C. §10004(E )(2), THIS AGENDA IS SUBJECT TO CHANGE TO INCLUDE THE ADDITION OR THE DELETION OF ITEMS, INCLUDING EXECUTIVE SESSIONS, WHICH ARISE AT THE TIME OF THE MEETING.

Can-Do Playground at Milford ~ A Boundless Playground in Milford, DE Page 1of1 CCln-Do ... ._.uP.l:A¥G·ROUND At Milford TIMELINE Where Dreams Are Never Disabled Home The Need • In 2007 six Wilmington area Rotary Clubs, partnering with Delaware State Parks, developed the first "Can- What? Do" playground in the State of Delaware. The playground was constructed in Alapocas Run State Park. In the Who? three years since it opened , it has been extremely popular, attracting an estimated 60 ,000 plus visitors. Anecdotal review has shown that visitors have traveled up to three hours just to have their children play at Newsletter this unique playground . Timeline In 2009, the project leaders from the Northern Delaware Can-Do Playground met with Assistant Rotary Photo Album Governor Peggy Anderson to consider expanding the Can-Do Playground effort to lower Delaware. Get Involved Six Central and Southern Delaware area Rotary clubs of area 4, District 7630 accepted the challenge of Sponsors developing a Can-Do Playground at Milford and initiated the project: HUB (Harrington, Greenwood , Felton) Centennial Rotary Lewes-Rehoboth Rotary Milford Rotary Rotarv District 7630 Milford Mispillion Rotary Nanticoke-Seaford Rotary Rehoboth Sunrise Rotary In 2009 the project team joined with The City of Milford and The Department of Parks and Recreation , which have provided the land , will complete all site preparation and will maintain the playground once it is constructed. In 2009, The Rotarians organized a board of directors, an advisory board and several working committees of volunteers who have been designing and developing this project and engaging in raising funds. David Rutt was chosen as the project leader. At this point, the committees set about their work in formulating plans . In 2010 , area residents and the Project team met with Boundless Playgrounds to conceptualize the wants, dreams and design for the playground . In the early part of 2011, the Can-Do Playground at Milford was granted status as a 501c3 charitable organization , ensuring that all donations are tax deductible. • As of June 5 2012, charitable donations reached the level of $480,203, which represents 60% of the project's goal. Groundbreaking ceremony: June 11 , 2012 June, 2013 - Site preparation begins September, 2013 - Equipment installation begins Fall , 2013 - Donation goal of $850,000 achieved December4 , 2013 - Ribbon Cutting- Can-Do Playground opens Friday, May 9, 2014 (11am) - Dedication Ceremony Copyright© 2019, Can- Do Playg round at Milford, a 501 (c)3 charitable organization. All rights reserved. http://candomilford.org/timeline.php 1/4/2019

Can-Do Playground at Milford ~ A Boundless Playground in Milford, DE Page 1of8 r~n "\.I . .Do -.....,,, _.l?l:4¥GROUND At Milford Where Dreams Are Never Disabled Home PHOTO ALBUM The Need Playground site being graded What? ....-~~~~~~~~~~- Who? Newsletter Timeline Photo Album Get Involved Sponsors Rotarv District 7630 The Playground equipment is delivered! http://candornilford.org/photos. php 114/2019

Can-Do Playground at Milford ~ A Boundless Playground in Milford, DE Page 2of8 Early stages of Playground Equipment Construction ...-~~~~~~~~~~~- http://candomilford.org/photos. php 1/4/2019

Can-Do Playground at Milford ~ A Boundless Playground in Milford, DE Page 3of8 Work nears completion http://candomilford.org/photos. php 1/4/2019

Can-Do Playground at Milford~ A Boundless Playground in Milford, DE Page 4of8 Playground is Completed http://candomilford.org/photos. php 1/412019

Can-Do Playground at Milford ~ A Boundless Playground in Milford, DE Page 5of8 http://candomilford.org/photos. php 1/4/2019

Can-Do Playground at Milford ~ A Boundless Playground in Milford, DE Page 6of8 http :IIcandomilford.orglphotos. php 1/412019

Can-Do Playground at Milford ~ A Boundless Playground in Milford, DE Page 7of8 http://candomilford.org/photos. php 114/2019

Can-Do Playground at Milford ~ A Boundless Playground in Milford, DE Page 8 of 8 Copyright © 2019, Can-Do Playground at Milford, a 501 (c)3 charitable organization. Al l rights reserved . http://candomilford.org/photos. php 1/4/2019

ACTION FORM PROCEEDING: Committee of the Whole (Utility) AGENDA ITEM NO.: DEPARTMENT OF ORIGIN: Electric DATE SUBMITTED: 12/27/2018 PREPARED BY: James S. Robinson, Electric Director SUBJECT: Evaluation of Proposals – Tree Trimming REFERENCE: N/A RELATED PROJECT: N/A APPROVALS: City Manager, Controller EXHIBITS: N/A EXPENDITURE REQUIRED: Not to exceed $350,000 (*) per year AMOUNT BUDGETED: $350,000 per year FUNDING SOURCE (Dept/Page in CIP & Budget): Funding is provided under “Contractual Services” for primarily T & D division operations budget account # 410-42-82-99-000-53031. TIMETABLE: Contract to be executed within two (2) weeks of Council Approval. RECOMMENDED ACTION: Staff recommends awarding a contract to Asplundh Tree Expert LLC as per the proposal submitted in response to RFP #19-001EL (*) Final yearly expenditure will be the actual amount of time and equipment billed monthly. BACKGROUND AND ANALYSIS The Electric Department maintains blanket contracts with potential contractors to ensure that the bidding rules are adhered to for contractors that are hired to perform work for the Department. These contracts are priced as a “time and material” contract and may exceed $25,000 annually. This proposal is for a tree trimming contract used to maintain clearance around the city’s overhead transmission and distribution electric lines. This is the single most important maintenance project as it relates to the reliability of our overhead system. Typically, there are two (2) full-time crews working throughout the system to perform this maintenance. Additionally, this company has crews available to assist during storm events and this proposal includes pricing for these potential events. Bids were solicited and advertised according to the City policy by the City’s Contract and Procurement Manager under Bid #19-0011EL and bids were received from three (3) potential vendors. The proposals were evaluated using the following criteria: past performance on similar size and scope projects, technical qualifications, incident rates, working plan, other available resources, corporate wide OSHA violations, corporate wide FLSA violations, Department of Justice violations and overall cost. A bid summary sheet was created using the unit prices for the standard crews utilized by the Electric Department, which indicated that Asplundh Tree Expert LLC. is the low bidder and the highest scorer using the evaluation criteria. The other two bidders did not provide the required working plan and their pricing was higher than Asplundh. Additionally, Asplundh has performed exceptionally well during the last 5 years of the current contract. The duration of the bid is a three (3) year contract with the possibility of fourth (4th) and fifth (5th) year extensions dependent upon satisfactory performance. Pricing estimates are as follows: 5 Year Yearly Total Yearly Total Yearly Total Yearly Total Yearly Total Bidder Name Contract 2019 2020 2021 2022 2023 Total Asplundh Tree Expert Co. * $313,944.88 $323,379.69 $333,085.58 $343,057.57 $353,364.91 $1,666,832.64 Marathon Resource Management $532,248.00 $532,248.00 $532,248.00 $532,248.00 $532,248.00 $2,661,240.00 Group LLC Pro Cut Tree $504,000.00 $504,000.00 $504,000.00 $504,000.00 $504,000.00 $2,520,000.00 * Asplundh claimed local vendor preference (3%) Page 1 of 1

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware This page intentionally left blank

Prepared by the Finance Department Lori Peddicord, Controller/Treasurer

ACKNOWLEDGEMENTS THE CITY OF DOVER’S COMPREHENSIVE ANNUAL FINANCIAL REPORT WAS PREPARED BY THE FINANCE DEPARTMENT TRACEY LISIECKI FINANCIAL REPORTING & ACCOUNTING MANAGER JEFFREY DILL ACCOUNTANT II JENNIFER HELMS ACCOUNTANT II SHARON DANIEL ACCOUNT CLERK II JENNIFER GUZMAN-PEREZ PAYROLL SPECIALIST DEBBIE O’BRIEN ADMINISTRATIVE ASSISTANT SPECIAL APPRECIATION IS EXTENDED TO MRS. DONNA S. MITCHELL, CITY MANAGER, AND ALL PERSONNEL THROUGHOUT THE CITY FOR THEIR CONTINUED SUPPORT OF THE FINANCE DEPARTMENT.

City of Dover, Delaware Comprehensive Annual Financial Report Fiscal Year 2018 Table of Contents PAGE INTRODUCTORY SECTION 1 Letter of Transmittal ....................................................................................................................................3 Certificate of Achievement for Excellence in Financial Reporting ..........................................................11 Mayor and City Council Members .............................................................................................................12 List of Elected Officials ...............................................................................................................................13 List of Appointed Officials .........................................................................................................................14 List of Committees, Commissions, and Boards .........................................................................................15 Organization Chart ....................................................................................................................................16 Vision ............................................................................................................................................................17 FINANCIAL SECTION 19 PART A - Report of Independent Public Accountants ...............................................................................21 PART B - Management’s Discussion and Analysis .................................................................................. 27 PART C - Basic Financial Statements ..........................................................................................................45 Government-wide Financial Statements Statement of Net Position ......................................................................................................................47 Statement of Activities ..........................................................................................................................48 Fund Financial Statements Governmental Funds Balance Sheet .....................................................................................................49 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ......50 Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds ....51 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ..............................................................52 Statement of Net Position – Proprietary Funds....................................................................................53 Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds ............54 Statement of Cash Flows – Proprietary Funds .....................................................................................55 Statement of Net Position – Fiduciary Funds .......................................................................................56 Statement of Changes in Net Position – Fiduciary Funds ...................................................................57 Notes to Financial Statements Index to Notes to Financial Statements ................................................................................................59 Notes to Financial Statements ...............................................................................................................61 i

City of Dover, Delaware Comprehensive Annual Financial Report Fiscal Year 2018 Table of Contents PAGE FINANCIAL SECTION – CONTINUED Part D - Required Supplementary Information ........................................................................................119 General Fund – Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (Non-GAAP Basis) .........................................................................................................121 Police Pension Fund Schedule of Changes in Net Pension Liability, Related Ratios .....................................................123 Schedule of Employer Contributions .............................................................................................123 Net Pension Liability .......................................................................................................................124 General Employee Pension Fund Schedule of Changes in Net Pension Liability, Related Ratios .....................................................125 Schedule of Employer Contributions .............................................................................................126 Net Pension Liability .......................................................................................................................126 Delaware Public Employee Retirement System – County and Municipal Police and Firefighter’s Pension Plan Schedule of the City of Dover’s Proportionate Share of the Net Pension Liability ....................127 Schedule of the City of Dover’s Contributions .............................................................................127 Other Post-Employment Benefits Trust Fund Schedule of Changes in Net OPEB Liability, Related Ratios .........................................................128 Schedule of City’s Contributions....................................................................................................129 Notes to Required Supplementary Information Governmental Budgets....................................................................................................................130 Part E - Supplementary Information ..........................................................................................................131 General Fund Combining Schedules ..........................................................................................................133 Combining General Fund Balance Sheet .............................................................................................134 Combining Statement of Revenues, Expenditures and Changes in Fund Balances of the General Fund (Non-GAAP Basis) .............................................................................................135 Governmental Capital Projects Fund – Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (Non-GAAP Basis) ..................................................................136 Financial Statements Special Revenue Funds ............................................................................................137 Special Revenue Funds – Combining Balance Sheet ..........................................................................139 Special Revenue Funds – Combining Statement of Revenues, Expenditures and Changes in Unreserved Fund Balances .......................................................................................................140 Police Grants – Schedule of Revenues, Expenditures and Changes in Unreserved Fund Balance – Budget (Non-GAAP Basis) and Actual .....................................................................................141 ii

City of Dover, Delaware Comprehensive Annual Financial Report Fiscal Year 2018 Table of Contents PAGE FINANCIAL SECTION – CONTINUED Library Grants – Schedule of Revenues, Expenditures and Changes in Unreserved Fund Balance – Budget (Non-GAAP Basis) and Actual .....................................................................................142 Municipal Street Aid Fund – Schedule of Revenues, Expenditures and Changes in Unreserved Fund Balance – Budget (Non-GAAP Basis) and Actual..........................................................143 Housing Programs – CDBG & NSP – Schedule of Revenues, Expenditures and Changes in Unreserved Fund Balance – Budget (Non-GAAP Basis) and Actual .....................................144 State of Delaware Department of Transportation Grants – Schedule of Revenues, Expenditures . and Changes in Unreserved Fund Balance – Budget (Non-GAAP Basis) and Actual ........145 Substance Abuse Prevention Program – Schedule of Revenues, Expenditures and Changes in Unreserved Fund Balance – Budget (Non-GAAP Basis) and Actual .....................................145 Proprietary Fund Types - Enterprise Funds ...............................................................................................146 Water/Wastewater Fund – Schedule of Revenues and Expenses – Budget (Non-GAAP Basis) and Actual..................................................................................................................................147 Water/Wastewater Improvement & Extension Fund – Schedule of Revenues and Expenses – Budget (Non-GAAP Basis) and Actual .................................................................................148 Electric Revenue Fund – Schedule of Revenues and Expenses – Budget (Non-GAAP Basis) and Actual..................................................................................................................................149 Electric Improvement & Extension Fund – Schedule of Revenues and Expenses – Budget (Non-GAAP Basis) and Actual..................................................................................................150 Proprietary Fund Types - Internal Service Funds .....................................................................................151 Internal Service Fund – Worker’s Compensation – Schedule of Revenues and Expenses – Budget (Non-GAAP Basis) and Actual ................................................................................152 Fiduciary Fund Types Agencies ..................................................................................................................153 Combining Statement of Changes in Assets and Liabilities – All Agency Funds ..............................154 STATISTICAL SECTION 155 Net Position by Component.........................................................................................................................158 Changes in Net Position ..............................................................................................................................159 Fund Balances of Governmental Funds .....................................................................................................161 Changes in Fund Balances of Governmental Funds .................................................................................162 Governmental Activities Tax Revenues by Source ...................................................................................164 Assessed and Estimated Actual Value of Taxable Property .....................................................................165 Property Tax Rates – All Direct and Overlapping Governments with the Capital School District ......166 Principal Tax Payers ....................................................................................................................................167 iii

City of Dover, Delaware Comprehensive Annual Financial Report Fiscal Year 2018 Table of Contents PAGE STATISTICAL SECTION – CONTINUED Property Tax Levies and Collections ..........................................................................................................168 Ratios of Outstanding Debt by Type...........................................................................................................169 Ratio of Net General Obligation Bonded Debt to Assessed Value and Net Bonded Debt Per Capita ....170 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures ..............................................................................................................................171 Computation of Direct and Overlapping Debt with the Capital School District ...................................172 Computation of Legal Debt Margin ...........................................................................................................173 Revenue Bond Coverage – Electric Revenue Bonds ..................................................................................174 Revenue Bond Coverage – Water/Wastewater Bonds .............................................................................175 Top Ten Water/Wastewater Utility Customers ........................................................................................176 Top Ten Electric Utility Customers .............................................................................................................177 Demographic and Economic Statistics .......................................................................................................178 Major Employers – Current Year and Nine Years Ago ............................................................................179 Full-time Equivalent City Government Employees by Function – Budgeted .........................................180 Operating Indicators and Capital Assets Used in Operations ..................................................................181 Summary of Insurance ................................................................................................................................183 iv

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware INTRODUCTORY SECTION LETTER OF TRANSMITTAL CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING MAYOR AND MEMBERS OF COUNCIL LIST OF ELECTED OFFICIALS LIST OF APPOINTED OFFICIALS LIST OF COMMITTEES, COMMISSIONS AND BOARDS ORGANIZATION CHART VISION 1

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section This page intentionally left blank 2

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section December 31, 2018 The Honorable Mayor, Honorable Council President, Members of the City Council and Citizens of the City of Dover Dover, Delaware 19901 Ladies and Gentlemen: I am pleased to submit the Comprehensive Annual Financial Report of the City of Dover for the fiscal year ended June 30, 2018. This report is published to comply with the provisions of Article IV, Section 46 of the City Charter. It is also intended to provide financial data to the tax and ratepayers, bondholders, trustees, banks, federal and state agencies and the financial community at large. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. The financial statements in this report have been audited by CliftonLarsonAllen LLP, an independent firm of certified public accountants as required by Section 46 of the City Charter. CliftonLarsonAllen LLP has provided an unmodified opinion on the City of Dover financial statements for the year ended June 30, 2018. The report of independent public accountants is located at the front of the financial section of this report. Management’s Discussion and Analysis (MD&A) provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. Our MD&A can be found immediately following the report of our independent auditors. 3

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section THE REPORTING ENTITY AND ITS SERVICES The City of Dover was incorporated in 1829 under a Charter granted by the General Assembly. Dover is the Capital of the State of Delaware and is located in the central part of the State. It is home to the State Governor’s office, legislative offices, and is the County seat for Kent County. The City currently occupies a land area of 23.74 square miles and serves a population of approximately 38,422. Dover’s governing body is composed of a Mayor and nine Council Members, with one Council Member elected by Council to serve as Council President. Two members of City Council are elected from each of the four districts; the ninth Council member of Council and the Mayor are elected at-large. The Council is responsible for all matters of policy and is the authority for levying taxes, securing revenues, authorizing expenditures of City funds and incurring City debts. The City of Dover operates under a Council – Manager form of government. The City provides a full range of services as mandated by the Charter or adopted by the City Council. They include police protection, street and sanitation maintenance, recreation, library, community development, economic development, public improvements, planning and zoning, safety inspections, electric power generation and distribution, water and wastewater services, legislative services and general administration. Within the City is a volunteer fire company that is autonomous. Under established criteria, the operations of the Robbins Hose Fire Company are not a part of this report. However, the City provides financing for dispatching, personnel costs, most of the building and equipment maintenance, supplies, and contractual services. The City also provides funding to Robbins Hose for payments on several pieces of firefighting apparatus. These payments are grouped under the Fire Department and are included in the General Fund. The Fire Chief is elected by the volunteer members of the Fire Company. The City Council traditionally adopts the election and officially appoints the Fire Chief for a one- year term. Therefore, the position of Fire Chief is included in the City organization chart. The Capital School District does not meet the established criteria for inclusion in the reporting entity and, accordingly, is excluded from this report. The City Council shall, on or before the second Monday of June in each year, adopt a budget for the succeeding fiscal year. This annual budget serves as the foundation for the City of Dover’s financial planning and control. The budget is prepared by fund and department. With approval of the City Manager and Controller/Treasurer, Department Heads may transfer resources within or between departments, with the exception of capital project budgets. Transfers between funds and transfers of capital project budgets, however, need special approval from the City Council. 4

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section ECONOMIC CONDITION AND FUTURE GROWTH The City of Dover is distinguished as the dominant center of employment, commerce, educational opportunity, and cultural activity in Central Delaware. Economic growth appears to be occurring in Dover, as evidenced by the level of building permit activity and the high value of construction during the fiscal year 2018 (July 2017-June 2018). Residential growth remains steady and major institutions and commercial entities continue to expand to meet the demands of the regional population and economy. The commercial corridor areas of U.S. Route 13, Bay Road, and DE Route 8 have continued to be the center of commerce in Dover. Significant new projects have commenced in the past year specifically to renovate and expand commercial services in the U.S. Route 13 corridor. Efforts to revitalize the traditional urban core of downtown Dover and its adjacent residential neighborhoods have continued through the efforts of multiple groups in the designated Downtown Development District area. Total value of construction was estimated at $159.8 million during fiscal year 2018. This significant increase from $41.6 million in fiscal year 2017 is related to a large student housing project at Delaware State University and several other large commercial and office building projects. It is encouraging to see investment across all sectors and throughout the City. Building permits issued during this period total 2,528 permits which keeps pace with the previous year’s permit levels. The City of Dover issued 4,345 Business Licenses in fiscal year 2018 Growth and development trends during fiscal year 2018 are further discussed and summarized below: Population Growth The 2010 U.S. Decennial Census, which was conducted in April 2010, found that 36,047 people reside in Dover. The Delaware Population Consortium estimates that the City of Dover’s population as of July 1, 2017 was 38,102, a population increase of 5.7% over the decennial Census. Recent residential building permit numbers suggest that the current estimates may be low, not fully reflecting recent growth. Residential Development The City’s growth in the residential sector is focused in two areas: the build-out of previously platted subdivisions and the development of new multi-family units as apartment complexes. Subdivision build-out is primarily one-family detached dwelling units with some townhouse unit construction. Construction continues in such existing developments as Clearview Meadow PND, Village of Westover Phase VI, Village of Cannon Mill PND, Patriot Village, and Seskinore. For multi-family (apartment units), the City is seeing the reconstruction/rehabilitation of existing complexes such as Liberty Court and Whatcoat Village. However, the increase in the apartment unit type is occurring in the on-going construction of new units in the developments of Tall Pines, Leander Lakes 5

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section Apartments, Blue Hen Apartments Phase 2, The Arbors, and a fourth building at The Grande. These projects and others are expected to have a positive influence on the City’s annual rate of growth. Downtown Dover Redevelopment Downtown revitalization continues to occur in both the commercial and residential sectors. Through the Downtown Development District designation, the work of the Downtown Dover Partnership, and the efforts of those involved in the Restoring Central Dover program, new businesses have opened on Loockerman Street and new owner- occupied housing is rapidly changing the appearance and appeal of formerly blighted areas. The City, NCALL, Habitat for Humanity and others are involved in street lighting initiatives, sponsoring Downtown events, and creating a much more positive image for Dover’s historic central business district and the adjacent residential areas. After being named in 2015 as one of the initial Downtown Development Districts in the State, the City’s Planning Office continues to make the Downtown Dover Development District’s various City incentives, the project cost rebates offered by the State (managed by the Delaware State Housing Authority), and the other incentives more widely known. In the fiscal year 2018 timeframe, seventeen (17) residential properties and four (4) commercial properties qualified for City incentives and are working to bring their development projects to life. Retail/Commercial Development Construction in the retail sector continues to show improvement during fiscal year 2018, particularly along the DuPont Highway/Route 13 corridor. The restaurants of Panera Bread and Longhorn Steakhouse constructed new buildings helping to redevelop a former ‘big-box’ retail site. Construction also began on the Capital Station site, a multi-building shopping complex, where the former Playtex industrial site was demolished, and Brownfield remediation activities were completed. Office building construction was also initiated along the Bay Road corridor and on North Street. The first commercial building of the Eden Hill Farm TND Neighborhood Commercial District saw occupancy by its first tenant, the new medical office of Nemours Pediatrics. Chesapeake Utilities/Eastern Shore Natural Gas also began construction of a Dover Campus on Energy Lane in the North Gate Center to consolidate and expand their headquarters offices and warehouse/work yard facilities Institutional Development The Dover economy is continuing to be well balanced with a solid mix of military, health, governmental, educational and industrial components. The health care sector saw the new skilled nursing facility of the Center at Eden Hill open on Banning Street and construction commence on the Post-Acute Medical Rehabilitation Hospital on McKee Road. Delaware State University began construction of a major student housing project of 600 beds to replace several aging dormitory buildings on its campus. Wesley College, Del-Tech and Wilmington University continue to show solid student enrollment growth. 6

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section Infrastructure The City has several large water and sewer projects underway to upgrade pump stations, distribution and transmission mains. These projects will improve water quality and reduce the inflow/infiltration in our sewer system. The City continues to upgrade the electric transmission and distribution system with systematic upgrades to substations and the transfer of overhead distribution lines to underground lines in the electric territory subdivisions. The City has ongoing street and sidewalk rehabilitation programs and has completed several water and sewer improvement projects prior to street projects. Also, in this timeframe, the West Dover Connector project, now known as the POW-MIA Parkway was completed connecting North Street/Saulsbury Road to points south thus alleviating some of the thru traffic going through the Downtown area. Summary Fiscal year 2018 saw continued and meaningful growth in the state capital. Dover remains a center for commerce, as evidenced by the retail expansions seen during fiscal year 2018 as well as growth in commercial/retail, office and health care services and a renewed interest in the buildout of existing residential communities. Dover is well positioned to support continued growth and redevelopment; and the investment associated with the State’s Downtown Development District program creates an optimistic future for the City of Dover. LONG-TERM FINANCIAL PLANNING AND MAJOR INITIATIVES The City Council continues its focus on replacing or upgrading old infrastructure in order to improve the quality and reliability of our utility systems. In FY18, the City invested $0.8 million in street improvements, upgrades to the Silver Lake Dam - $0.3 million, and $0.2 million in stormwater improvements. The water and wastewater capital improvements $2.3 million were completed. This included the completion of Bradford Street and William Street water main replacements, Rolling Acres pump station replacement, Westover pump station and force main, and emergency improvements to Pump Station 7. The electric utility completed capital improvements of $4.7 million in fiscal year 2018. The major initiatives completed by our Transmission and Distribution crews was the transition of overhead to underground in the Town Pointe neighborhood, several new service request in the commercial sector, and the switchgear replacement program. On the generation assets, an overhaul of the VanSant generating unit was completed, as well as capital maintenance improvements on the McKee 3 unit. The City maintains a five-year Capital Investment Plan which serves as its planning and budgeting tool to program upgrades and replacements to its equipment, facilities, and infrastructure. As part of this process, operating expenses are identified, and funding 7

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section sources are determined. Managers are required to rank capital expenditures by criticality based on the impacts on customer service and revenue losses. The fiscal year 2018/2019 Capital Investment Plan includes $1.9 million for vehicles and equipment and $17.6 million of infrastructure and utility improvement projects. The Capital Investment Plan is presented to City Council each year during the budget workshops, and the final plan is approved by City Council along with the annual budget. In fiscal year 2019, the budget includes $1.5 million of improvements for the Public Works operations and yard relocation, as well as the cleanup of the previous operations yard. Another $0.2 million is included for streetscape improvements. The City completed Master Plans for two major parks in FY18. The budget also includes a new Administration Building for the Parks and Recreation staff, as well as some improvements as outlined in the Master Plans for a total cost of $0.5 million. In fiscal year 2019, the water and wastewater budgets include an upgrade and overhaul of the Water Treatment Plant for approximately $7 million. This project will carry over into FY20. Also included are replacements of the Delaware Tech, Silver Lake and Walker Woods pump stations. The City is continuing the inflow/infiltration improvement program for our sewer system as well as various water quality improvements. The Electric Fund is projecting $6.3 million in capital improvements for FY19. New developments encompass $0.9 million of projected improvements. The enterprise resource planning solution (ERP) project will be in its second year of implementation, an overhaul of the HVAC system at Weyandt Hall is scheduled for completion, as well as various capital maintenance improvements on McKee Unit 3. The City will be performing a GIS audit of all street lights in order to bid out the changeover to LED lighting City-wide. FINANCIAL POLICIES AND FINANCIAL PLANNING Unassigned fund balances in the General Fund (17.5%) exceeded the policy guidelines of a minimum of 8% and maximum of 12% of current year operating revenues as approved by City Council in the City of Dover financial policies. This overage was attributed to lower than budgeted expenditures along all functions of the government due to attrition and vacancies, and as a result, the fiscal year 2019 budget will be adjusted to address the overage. The water and wastewater utility guidelines are to maintain a minimum budget balance of at least 8% and no greater than 17% (two months) of the current year operating revenues. The water and wastewater utility ended the year with a combined budget balance greater than the 17% at 18.2%. The current budget balances as of June 30, 2018 for the utilities are water at 27.0% of the actual water revenues and wastewater at 11.4% of the actual wastewater revenues. The overages will be addressed in the fiscal year 2019 budget. The electric utility is to maintain a minimum budget balance of at least 12% (45 days) of the current year operating revenues less the Distribution of Earnings – PCA Credit. If the 8

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section balances fall below the established percentages, the City Manager is required to submit budgets to bring the balances up to minimum within three years. The electric utility ended the year with a budget balance greater than the 12% at 19.1%. This was attributed to lower than projected power supply and generation cost and higher than anticipated direct base sales. The fiscal year 2019 budget will include a distribution of prior year earnings to the electric customers in the form of a negative power cost adjustment. The City policies also require non-recurring revenues to be set aside for capital improvements as designated by City Council (reserve accounts) and a $700,000 contingency reserve in the General Fund, $250,000 each for the Water/Wastewater Fund contingency reserves and $750,000 contingency in the Electric Revenue Fund to address unforeseeable natural disasters and insurance losses. All major funds meet the contingency reserve requirements. The water and wastewater utilities impose impact fees, which are reserved by ordinance, on new developments or facilities to assist with financing future expansion projects. The electric utility maintains depreciation and future capacity reserves to assist with asset replacements and system expansions. Financial policies require the electric utility to maintain a minimum of $10.0 million in each of these reserves, with replenishment over seven years when used to finance projects. The City’s financial policies also include an Electric Rate Stabilization Reserve account. The purpose of this reserve is to level off the fluctuations in the wholesale power supply market and in turn provide stable rates to the City’s customers. The reserve balance shall be maintained at a minimum of 10% not to exceed 20% of the purchase power cost in any given year. If the reserve balance exceeds the 20% maximum, a credit will be applied to the power cost adjustment. AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Dover, Delaware for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2017. This was the thirty-third (33) consecutive year that the City of Dover has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report. The report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. 9

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section The Finance Department extends our thanks to you for your continued interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. I also express my appreciation to the many City employees for their assistance and cooperation during the year in preparation of this report. My appreciation is extended to Mrs. Dawn Melson-Williams, Principal Planner for her assistance with the preparation of the local economy section, and Mrs. Debbie O’Brien for her support in the preparation of the annual report. Special appreciation is extended to the employees of the Finance Department, whose pride and dedicated service continues to make this report and each year a success. Respectfully submitted, Lori Peddicord Controller/Treasurer 10

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2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section LIST OF COMMITTEES, COMMISSIONS & BOARDS As of June 30, 2018 Awards Committee Downtown Dover Partnership Board of Directors (Continued) Kent County Tourism Board of Directors Peggy Angel Councilman Fred A. Neil Councilman Fred A. Neil Ronald R. Gough Mayor Robin R. Christiansen Georgia Van Sant State of Delaware Representative - Vacancy Kent Economic Partnership Board of Directors Diane Laird, Office of Economic Development Councilman David L. Anderson Bicycle and Pedestrian Subcommittee Timothy A. Slavin, Office of the Secretary of State James A. Hutchinson, III, P.E., Chair Brian Bushweller, State Senator - 17th District Legislative, Finance, and Administration Committee Chris Asay, Vice Chair Sean M. Lynn, State Representative - 31st District Councilman William F. Hare, Chair Jayce Lesniewski Lucy Findlay Daniel T. Shevock Dave Moses Michael Harrington Courtney Stewart Gerry Pennington Maxine Lewis Fran Riddle Mitch May Other Post-Employment Benefits (OPEB) Board Andy Seigel Gregory V. Moore Councilman Scott W. Cole Todd Stonesifer Councilman Matthew J. Lindell Board of Adjustment Erin L. Thwaites City Manager, Donna S. Mitchell K.C. Sheth, Chair Wendie Vestfall Controller/Treasurer, Lori Peddicord Arthur G. Ericson, Vice Chair Chief Executive Officer of Bayhealth Foundation, Vacancy Human Resources Director, Kimberly Hawkins William A. Hufnal President of Wesley College, Robert E. Clark, II James N. Keller Parks, Recreation and Community Enhancement Richard D. Senato Economic Development Committee Councilman Roy Sudler, Jr., Chair Mayor Robin R. Christiansen, Chair M. Milford Caldwell, Jr. Board of Assessment Appeals City Manager, Donna S. Mitchell Kim Warfield William Garfinkel, Undesignated, Chair Councilman William F. Hare Thomas Burns, Real Estate Brokerage of Sales Councilman Scott W. Cole Planning Commission James Galvin, Undesignated Anita Evans At-Large: Dr. Bobby Jones John Kelly, Accounting City Planner, David S. Hugg III First District: Kathleen Welsh, Vice Chair Todd Stonesifer, Real Estate Brokerage of Sales Clayton E. Hammond II First District: Deborah L. Edwards Vacancy, Property Appraisal/Assessments Vacancy Second District: Thomas Holt Second District: Andrea Maucher Compensation Commission Election Board Third District: Dean Holden Vacancy At Large: Vacancy Third District: Fred Tolbert, Chair Vacancy First District: Anita L. McDowell Boyer Fourth District: John H. Baldwin, Sr. Vacancy Second District: Cherritta L. Matthews Fourth District: Kenneth Roach Vacancy Third District: Vacancy Vacancy Fourth District: M. Milford Caldwell Police Pension Plan - Retirement Committee Controller/Treasurer, Donna S. Mitchell Traci A. McDowell, City Clerk (Liaison Member) Councilman David L. Anderson Human Resources Director, Kimberly Hawkins Councilman Brian E. Lewis Ethics Commission City Manager, Donna S. Mitchell Construction and Property Maintenance Code Board of Appeals Thomas C. Jackson, Chair Chief of Police, Marvin C. Mailey Councilman David L. Anderson, Chair Robin F. Case (Ret. Lt.) Timothy Mullaney, Sr., Chair Councilman Brian E. Lewis Gary Coy (Ret. Captain) Larry Gray Councilman Fred A. Neil Lisa M. Enright (Ret. Sgt.) Steve Rogers Charles Martin Nancy J. Shevock Vacancy Public Advisory Committee of the Dover/Kent County MPO General Employee Pension Plan Board of Trustees Dr. Carlton L. Cannon, Jr. Dover Fourth of July Celebration Committee Councilman David L. Anderson Jonathan Contant Greg Patterson, President/Vice Chair Councilman Brian E. Lewis Karen McGloughlin Mayor Robin R. Christiansen, Chair City Manager, Donna S. Mitchell Vacancy (At-Large Alternate) Andrea Maucher, Vice-President Controller/Treasurer, Lori Peddicord Jennifer Helms, Treasurer/Secretary Robert Gedney Safety Advisory and Transportation Committee Susan Betts Kristen Mullaney Councilman Brian E. Lewis, Chair Carolyn D. Courtney Ronald P. Swaggard William T. Garfinkel Gail Nemcic Dana Shelton Vacancy Greater Dover Arts Council Sarah Zimmerman Chevis Anderson, Chair Silver Lake Commission Sydney Arntz Dean Holden, Chair Dover Housing Authority N. Taylor Collins Nicholas Adams Mark Harmon Caroline Greene Tricia Arndt Enrico LePore Charles Guerin James Burcham Robert F. Merritt Paul Janiga Zachery C. Carter Audrey Daniels Tracey Miller Lyle Allen Jones Phillip McGinnis Cheryl Scheir Vacancy Sandra Taylor Cynthia Witt Rufus Mincey, Interim Executive Director/Secretary Sarah Zimmerman St. Jones Greenway Commission James Burcham Dover Public Library Advisory Commission Historic District Commission Michael P. Mercer Councilman Scott W. Cole Joseph McDaniel (Chair) Business Rep./Resident City Parks and Recreation Director, Margery Cyr Zachery C. Carter Ann Baker Horsey, (Vice-Chair) Professional/Resident Gertrude Jackson Eric S. Czerwinski, Professional Utility Committee Beth Petit De Mange Mary Terry Mason, Resident Councilman Scott W. Cole, Chair Jill B. Street Jonathan N.H. Street, Professional Kathleen Doyle Robert S. Wetherall Margaret A. Scarborough Human Relations Commission Dover/Kent County MPO Council At-Large: Sara Herbert Mayor Robin R. Christiansen First District: Paul Fleming First District: Gerald Rocha, Sr. Downtown Dover Partnership Board of Directors Second District: Vacancy Anita Evans (President) Second District: Theodore Henderson, Chair City Manager, Donna S. Mitchell Third District: Alan Gaddis City Planner, David S. Hugg III Third District: Wanda Mullen Councilman David L. Anderson Fourth District: Rita Mishoe Paige Councilman William F. Hare Fourth District: Vacancy 15

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section City of Dover CITIZENS OF Organization DOVER Chart CITY COUNCIL MAYOR POLICE DEPARTMENT CITY SOLICITOR PLANNING & CITY MANAGER CITY CLERK FINANCE FIRE TAX ASSESSOR COMMUNITY PROCUREMENT/ ENHANCEMENT PUBLIC WORKS ASSISTANT CITY ELECTRIC INVENTORY SERVICES MANAGER PUBLIC WORKS ELECTRIC ADMINISTRATION INFORMATION ADMINISTRATION CODE ENFORCEMENT TECHNOLOGY GROUNDS ELECTRIC ENGINEERING COMMUNITY CUSTOMER SERVICES & SYSTEM DEVELOPMENT SANITATION OPERATIONS INSPECTIONS/ LIBRARY ELECTRIC PERMITTING STREETS PARKS & RECREATION TRANSMISSION & LIFE SAFETY FACILITIES DISTRIBUTION MANAGEMENT PLANNING FLEET MAINTENANCE HUMAN RESOURCES WATER/ WASTEWATER ENGINEERING WASTEWATER MANAGEMENT WATER MANAGEMENT WATER CONSTRUCTION WATER TREATMENT PLANT For the Fiscal Year Ended June 30, 2018 16

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section VISION The City of Dover is a place where people want to live! Through the team effort of its elected officials, employees, and citizens, Dover is a clean and safe community, with a future of balanced growth and opportunity where all citizens are heard, enjoy a high quality of life, and diversity is valued. 17

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2018 Comprehensive Annual Financial Report for the City of Dover, Delaware FINANCIAL SECTION THIS SECTION INCLUDES THE FOLLOWING: PART A REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS PART B MANAGEMENT’S DISCUSSION AND ANALYSIS PART C BASIC FINANCIAL STATEMENTS Government-wide Financial Statements Fund Financial Statements Notes to Financial Statements PART D REQUIRED SUPPLEMENTARY INFORMATION PART E SUPPLEMENTARY INFORMATION Combined Fund Statements Budgetary Schedules 19

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2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis The City of Dover Management’s Discussion and Analysis For the Year Ended June 30, 2018 The following is a discussion and analysis of the City of Dover’s (the City’s) financial activities for the fiscal year ended June 30, 2018. Readers are encouraged to consider the information presented here in conjunction with additional information provided in our letter of transmittal, which can be found on pages 3-10 of this report, and the City’s financial statements which follow this section. Financial Highlights The City’s assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources by $198.7 million (net position). Included in this amount is a, ($14.1) million deficit in “unrestricted net position”. The total Net Position represents the funds available to meet the City’s ongoing obligations to citizens and creditors. The general government reported an unrestricted deficit of $36.8 million and the business-type activities, Water/Wastewater and Electric funds, reported a positive $22.7 million unrestricted net position. The difference between the unrestricted amounts and the total net position is $212.8 million, of which $47.7 million is restricted primarily for debt and capital construction purposes, and $165.1 million is net investment in capital assets. Total Assets increased for both the governmental and business-type activities in the amounts of $1.2 million and $3.1 million respectively. Deferred Outflows for the governmental and business-type activities both decreased $1.6 million and $0.5 million respectively. Deferred Inflows increased for both the governmental and Business-type activities by $1.4 million and $0.4 million respectively. Liabilities for both the governmental and business- type activities also decreased by $8.6 million and $3.1 million respectively.  For governmental activities, the City reported: a decrease of $1.2 million invested in capital assets, an increase in restricted net assets of $0.7 million, and an increase of $7.3 million in unrestricted net position. As a result of its operations, the City recognized a positive change in net position of governmental activities of $6.8 million. The current year’s change in net position is $1.9 million less than the previous years’ change in net position and is primarily due to increases in expenses across all functions of government totaling $3.5 million with an offsetting increase in revenues, from the prior year, of $2.2 million.  For business-type activities the City reported: an increase of $1.2 million invested in capital assets, an increase in restricted net position of $2.5 million and an increase of $1.6 million in unrestricted net position. As a result of its operations, the City recognized positive net position of business-type activities of $5.3 million. The current year’s change in net position is $10.6 million less than the previous years’ change in net position and is primarily due to a $9.4 million increase in Electric expenses resulting from a $3.7 million increase in purchased power; a $5.0 million increase in distributions to Customers – PCA Credit; and a $1.1 million increase in Retiree Health Care expense. 29

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis Overview of the Financial Statements This discussion and analysis section is intended to serve as an introduction to the City’s Comprehensive Annual Financial Report (CAFR). The CAFR consists primarily of three required components: 1) management’s discussion and analysis (this section), 2) the basic financial statements; and 3) required supplementary information. The CAFR also includes optional supplementary information that provides summary and detail level information, and a statistical section. The basic financial statements are presented in two categories that present different views of the City’s financial condition:  The two government-wide financial statements (pages 47-48) provide both long-term and short-term information about the City’s overall financial position and operations.  The remaining (pages 4 9 - 5 7 ) fund financial statements focus on specific activities of City government, reporting the City’s operations in more detail than the government- wide statements. The City financial statements can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. - The governmental fund statements (pages 49-52) tell how general government services, like community services, planning, public safety, and public works, were financed in the short term as well as what remains for future spending. - Proprietary fund statements (pages 53-55) offer short and long-term financial information about the activities the government operates like businesses, which for the City of Dover are the Electric and Water/Wastewater Funds. - The Fiduciary fund statements (pages 56-57) provide information about the financial relationships in which the City acts solely as a trustee or agent for the benefit of others, to whom the resources belong. The City is the trustee, or fiduciary, for its Employee and Police Pension plans and Other Post-Employment Benefits plan and acts in an agency capacity for the Dover Downtown Partnership and Fourth of July Celebration Committee, none of which are considered to be component units of the City. All of the City’s Fiduciary activities are reported in separate Statements of Fiduciary Net Position and Changes in Fiduciary Net Position. We exclude these activities from the City’s other financial statements because the City may not use these assets to finance its operations. The City is responsible for insuring that the assets reported in these funds are used for their intended purposes. The financial statements also include notes (pages 59-117) that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information (pages 119-130) that further explains and supports the information in the financial statements. Other supplementary information includes details on non-major funds and other information that can be found on pages 131 through 154. The following page summarizes the major features of the City’s financial statements, including the portion of the City government they cover and the types of information they contain. The remainder of this overview section of management’s discussion and analysis explains the structure and content of each of the statements: 30

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis Major Features of City’s Government-wide and Fund Financial Statements Government-wide Statements Governmental Funds Proprietary Funds Fiduciary Funds Scope Entire City The activities of the Activities the City Instances in which government City that are not operates similar to the City is the (except fiduciary proprietary or private businesses, trustee or agent funds) fiduciary, such as such as electric, for someone public safety and water and else’s resources public works wastewater funds Required financial  Statement of  Balance sheet  Statement of  Statement of statements net position  Statement of net position fiduciary net  Statement of revenues,  Statement of position activities expenditures, revenues,  Statement of and changes in expenses and changes in fund balances changes in net fiduciary net position position  Statement of cash flows Accounting basis Accrual Modified accrual Accrual accounting Accrual and measurement accounting and accounting and and economic accounting and focus economic current financial resources focus economic resources focus resources focus resources focus Type of All assets Generally, assets All assets deferred All assets and asset/deferred deferred outflows and deferred outflows of liabilities, both outflows of of resources, outflows of resources, short-term and resources/liability/ liabilities, and resources expected liabilities, and long-term deferred inflows deferred inflows to be used up and deferred inflows of of resources of resources both liabilities and resources both information financial and deferred inflows of financial and capital, and short- resources that come capital, and short- term and long- due or available term and long-term term during the year or soon thereafter, no capital assets, or long-term liabilities included Type of All revenues and Revenues for which All revenues and All revenues and inflow/outflow expenses during cash is received expenses during the expenses during information the year, during or soon after year, regardless of the year, regardless of the end of the year; when cash is regardless of when cash is expenditures when received or paid when cash is received or paid goods or services received or paid have been received and payment is due during the year or soon thereafter 31

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis Government-wide Statements The government-wide statements report information about the City as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the City of Dover’s assets, liabilities, and deferred inflows and outflows of resources with the difference reported as net position. Net position is one way to measure the City’s financial health or position. Over time, increases or decreases in the City’s net position is an indicator of whether its financial health is improving or deteriorating, respectively. To assess the overall health of the City, one needs to consider additional non-financial factors such as changes in the City’s property tax base and the condition of the City’s physical assets and infrastructure. The government-wide financial statements of the City are divided into two categories:  Governmental activities—Most of the City’s basic services are included here, such as general government, public safety, planning and code enforcement, public works, library and recreation, community and economic development, central services and financial administration. Property taxes, business licenses, permits, sanitation fees, fines, utility transfers and state and federal grants finance most of these activities.  Business-type activities—The City charges fees to customers to help it cover the costs of certain services it provides. The City’s electric, water, and wastewater services are included here. Fund Financial Statements The fund financial statements provide more detailed information about the City’s most significant funds—not the City as a whole. Funds are accounting devices that the City uses to keep track of specific sources of funding and spending for particular purposes. Some funds are required by State law and by covenants. The City Council may also establish other funds to control and manage money for particular purposes. The City has three kinds of funds:  Governmental Funds - Most of the City’s basic services are included in governmental funds, which focus on (1) how cash, and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps one determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. Since this information does not encompass the additional long-term focus of the government-wide statements, we provide additional information on a separate page, which explains the relationship (or differences) between them. - Governmental Fund Balance classifications are reported to the extent to which they are constrained as promulgated by Governmental Accounting Standards Board Statement No. 54. - The City’s General Fund is the only governmental fund considered to be a major fund under the requirements of Governmental Accounting Standards Board Statement No. 34. 32

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis  Proprietary Funds – Services, for which the City charges customers a fee, are generally reported in proprietary funds. Proprietary funds, like the government-wide statements, provide both long and short-term financial information. - The City’s enterprise funds (one type of proprietary fund) are the same as its business- type activities, but provide more detail and additional information, such as cash flows. - The City’s two enterprise funds are both considered major funds under the requirements of GASB Statement No. 34.  Fiduciary Funds – The City is responsible for assets that because of a trust arrangement can be used only for the trust beneficiaries. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the City’s fiduciary activities are reported in a separate statement of fiduciary net assets and a statement of changes in fiduciary net assets. We exclude these activities from the City’s government- wide financial statements because the City cannot use these assets to finance its operation. Financial Analysis of the City as a Whole The City produces government-wide financial statements using the full accrual basis of accounting and economic resource management focus. As year-to-year financial information is accumulated on a consistent basis, changes in net assets may be observed and used to discuss the changing financial position of the City as a whole. 33

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis The Net Position, of the City of Dover, as of June 30, 2017 and 2018 are as follows (presented in millions of dollars): Governmental Business-Type Activities Activities Total 2017 2018 2017 2018 2017 2018 Assets Non-Capital Assets $ 15.2 $ 17.8 $ 96.4 $ 99.9 $ 111.6 $ 117.7 Capital Assets 60.5 59.1 139.9 139.5 200.4 198.6 Total Assets 75.7 76.9 236.3 239.4 312.0 316.3 Deferred Outflow of Resources 4.7 3.1 1.3 0.8 6.0 3.9 Liabilities Current Liabilities 3.4 7.5 7.9 11.4 11.3 18.9 Non-Current Liabilities 57.7 45.0 51.1 44.5 108.8 89.5 Total Liabilities 61.1 52.5 59.0 55.9 120.1 108.4 Deferred Inflow of Resources 8.7 10.1 2.6 3.0 11.3 13.1 Net Position Net investment in Capital Assets 54.4 53.2 110.7 111.9 165.1 165.1 Restricted 0.3 1.0 44.2 46.7 44.5 47.7 Unrestricted (44.1) (36.8) 21.1 22.7 (23.0) (14.1) Total Net Position $ 10.6 $ 17.4 $ 176.0 $ 181.3 $ 186.6 $ 198.7 34

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis The Changes in Net Position, for the City of Dover, as of June 30, 2017 and 2018 are as follows (presented in millions of dollars): Governmental Business-Type Activities Activities Total 2017 2018 2017 2018 2017 2018 Revenues: Program Revenues Charges for Services $ 10.7 $ 12.2 $ - $ - $ 10.5 $ 12.2 Water/Wastewater Charges for Services - - 16.0 16.3 15.0 16.3 Electric Charges for Services - - 83.6 83.9 80.7 83.9 Operating Grants and Contributions 2.0 2.2 - - 2.7 2.2 Capital Grants and Contributions 0.4 0.3 1.2 - 0.7 0.3 General Revenues Property Taxes 12.9 13.1 - - 12.8 13.1 Transfer Taxes 1.6 2.0 - - 2.2 2.0 Earnings on Investments-Other 0.1 0.1 0.4 0.2 1.4 0.3 Total Revenues 27.7 29.9 101.2 100.4 126.0 130.3 Expenses General Government 4.5 4.6 - - 4.5 4.6 Public Safety 14.9 17.5 - - 14.9 17.5 Public Works 7.6 8.4 - - 7.6 8.4 Library and Recreation 2.9 3.1 - - 2.9 3.1 Community and Economic Development 0.4 0.5 - - 0.4 0.5 Central Services 1.4 1.6 - - 1.4 1.6 Financial Administration 3.1 3.4 - - 3.1 3.4 Interest Charges 0.1 0.1 - - 0.1 0.1 Plus (less) Indirect Expense Allocation (5.0) (5.2) 5.0 5.2 - - Water/Wastewater - - 9.8 10.0 9.8 10.0 Electric - - 59.6 69.0 59.6 69.0 Total Expenses 29.9 34.0 74.4 84.2 104.3 118.2 Change in Net Position before Transfers (2.2) (4.1) 26.8 16.2 16.4 12.1 Transfers 10.9 10.9 (10.9) (10.9) - - Change in Net Position 8.7 6.8 15.9 5.3 16.4 12.1 Net Position, beginning of year 33.0 10.6 174.6 176.0 207.6 186.6 Prior Period Adjustment - Net OPEB Liability (31.1) - (14.5) - (45.6) - Net Position, Beginning of Year restated 1.9 10.6 160.1 176.0 162.0 186.6 Net Position, End of Year $ 10.6 $ 17.4 $ 176.0 $ 181.3 $ 186.6 $ 198.7 35

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis Governmental Activities The preceding table shows changes in net position for the year ended June 30, 2018 compared to the year ended June 30, 2017. Governmental net position increased by $6.8 million; this is a decrease of $1.9 million from the prior years’ positive change in net position of $8.7 million. The beginning net position for year ended June 30, 2017 was restated by ($31.1) million, to adjust the OPEB Obligation to the Net OPEB liability for early implementation of GASB 75. In the past, the OPEB expense was the amount of the employer contribution. Current reporting provides a more comprehensive measure of OPEB expense which is more reflective of the benefit amounts employees earned during the year. Total revenues of $29.9 million were more than the prior year by $2.2 million. The increase in revenues is due to increases in: charges for services, operating grants and contributions, property taxes and transfer taxes totaling $2.3 million. The increases were offset by a decrease in capital grants and contributions of $0.1 million and earnings on investments-other remained constant. Total expenses in the amount of $34.0 million reflects an increase from the prior year of $4.1 million across all functions of government with interest charges remaining constant. The largest increases were in public safety in the amount of $2.6 million and in public works in the amount of $0.8 million attributed mainly to the increased costs for pension and OPEB. Additionally, the current year had an increase in expense for a budgeted general pension appropriation in the amount of $0.6 million. The chart that follows allocates revenues to program costs as applicable. It shows that some City functions are in part self-supporting either through customer charges or inter-fund receipts through the utilities (presented in millions of dollars): 36

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis Expenses, Program Revenue & Interfund Receipts - Governmental Activities $20 $18 $17.5 $16 $14 $12 Millions $10 $8.4 $8 $6.3 $6 $4.6 $4.6 $4 $3.4 $3.1 $2.5 $2.4 $2 $1.6 $1.1 $1.0 $1.0 $0.7 $0.3 $0.5 $0 General Public Safety Public Works Library & Community & Central Services Financial Government Recreation Economic Administration Development Interfund Receipts Revenues Expenses The following chart shows the sources of funding for program costs for the last fiscal year. As can be seen, a substantial portion of funding for governmental operations is provided by property taxes, charges for services and transfers from the utilities. Revenues by Source - Governmental Activities Interfund Receipts 11% Charges for Services 27% Utility Transfer In 24% Operating Grants and Contributions 5% Capital Grants and Contributions 1% Transfer Taxes Property Taxes 4% 28% 37

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis Business-Type Activities The business-type activities saw an increase in net position of $5.3 million. Both the water/wastewater and electric utilities combined experienced an increase in charges for services of $0.3 million. The indirect expense allocation increased by $0.2 million as well as the expense for the water/wastewater utility in the amount of $0.2 million. The expense for the electric utility increased by $9.4 million which resulted in a combined net increase in expense of $9.8 million. Transfers out to the general fund included $0.9 million from the water/wastewater utility and $10.0 million from the electric utility. The beginning net position for year ended June 30, 2017 was restated by ($14.5) million, to adjust the OPEB Obligation to the Net OPEB Liability for early implementation of GASB 75. In the past, the OPEB expense was the amount of the employer contribution. Current reporting provides a more comprehensive measure of Net OPEB liability and expense which is more reflective of the benefit amounts employees earned during the year. The water/wastewater utility realized a positive change in net position of $3.7 million. The utility experienced an increase in operating income of $0.3 million from the previous year. The increase in operating income was due to an increase in water fees, sewer fees, groundwater inflow adjustment fees and sewer treatment fees. Expenses in the water/wastewater fund increased by $0.4 million. Both the depreciation expense and general administration expense for water/wastewater increased by $0.2 million. Finally, the transfers out decreased by $0.2 million since there was no budgeted transfer to the electric fund this year to cover the new city-wide ERP system. The electric utility realized a positive change in net position of $1.5 million. The revenues increased by $0.1 million attributed to an increase in power usage by customers offset by decreases in general service billing for installation of electrical infrastructure and meters to private companies, other miscellaneous revenues and rent revenue. Expenses in the Electric Fund increased in total by $8.6 million including power supply and generation in the amount of $3.6 million, discount to customers in the amount of $4.5 million, engineering expense in the amount of $0.2 million, system operations in the amount of $0.1 million, general administration in the amount of $0.1 million, the net decrease in fair value of investments in the amount of $0.3 million and retiree’s healthcare in the amount of $1.1 million. The offsetting decreases were attributed to the following: $0.4 million for the Transmission and Distribution function, $0.7 million for depreciation, $0.1 million for utility tax, and $0.1 million for the metering function. 38

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis Operating Revenues, Expenses and Transfers - Business-Type Activities $90.0 $84 Operating $80.0 $70 Revenues & $70.0 Millions Transfers $60.0 $50.0 Operating Expenses & $40.0 Transfers $30.0 $20.0 $16 $12 $10.0 $- Electric Revenue Fund Water/Wastewater Fund Financial Analysis of the City’s Funds Governmental Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Government funds focus on expendable resources and near-term inflows and outflows of those resources. As such, fund balance is generally a good indicator of net resources available for spending at the end of the fiscal year, subject to any stated restrictions on its use. The combined fund balance of the City’s governmental funds as of June 30, 2018, was $12.9 million. This represented an increase of $2.5 million during the year. Approximately 54% of the combined fund balances, $7.7 million, constitutes unassigned fund balance, which is available to meet the City’s current and future needs. The remainder of fund balance is non-spendable, restricted, committed or assigned to indicate that it is not available for operational spending because it is constrained by legally enforceable contracts, other governmental agreements and legislation, City Council resolution or it is not convertible to cash within a reasonable period of time. Further detail of fund balances is presented in the Notes to the Basic Financial Statements in Note 7. The General Fund is the primary operating fund of the City, accounting for such activities as general government, public safety, public works, library, recreation, planning, community and economic development, central services and financial administration. The General Fund balance as of June 30, 2018, was $11.9 million. Revenue increased by $1.0 million due to increases in licenses and permits of $0.2 million, sanitation of $0.6 million, property taxes of $0.2 million and court of chancery fees of $0.2 million, offset by decreases totaling $0.2 million in fines, library revenue-county reimbursement, franchise fees, miscellaneous services and investment income. Expenditures increased by $0.5 million due to increases in: library services, recreation services, street/sanitation services, engineering services, retiree healthcare and an appropriation to the employee pension. Offsetting decreases are in: the general government function, general 39

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis public works function, and principal retirement of bond issues totaling $0.7 million. Other decreases were across the public safety and law enforcement, financial administration, garage and stores and street lights expense. The previously mentioned decreases were offset by small increases across the following two functions: insurance and interest and fiscal charges. Proprietary Funds The City’s proprietary funds provide the same type of information found in the government- wide financial statements, but in more detail. As of June 30, 2018, the water/wastewater fund has a net position of $59.2 million, of which $4.1 million is unrestricted. The fund’s net position increased $3.7 million during the year as explained on page 38. As of June 30, 2018, the electric revenue fund has a net position of $122.1 million, of which $18.6 million is unrestricted. This fund experienced an increase in net position of $1.5 million during the year as explained on page 38. General Fund Budgetary Highlights During this fiscal year, the City Council amended the budget one time. This budget amendment or supplemental appropriation ordinance was primarily for the following purposes: 1. To re-appropriate budget balances for ongoing capital projects. 2. To amend the grant budgets, reserve accounts for the actual results from the prior fiscal year and all carried forward budget balances for the major operating funds from the prior fiscal year, as well as program revenues and expenses based on changes in program revenues, expenses based on actual amounts. The General Fund financials in the Governmental Funds Balance Sheet (page 49) and Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds (page 51) include both the General Fund operating activities and the Governmental Capital Project Fund activities. The General Fund – Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget & Actual is included in Part D – Required Supplementary Information (pages 121-122). The Governmental Capital Projects Fund – Schedule of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual is included in Part E – Supplementary Information (page 136). The Combining Statements – Combining General Fund Balance Sheet and Combining Statement of Revenues, Expenditures and Changes in Fund Balances of the General Fund and the General Capital Projects Fund is included in Part E – Supplementary Information (page 134-136). The Final General Fund Budget incorporated an increase in beginning budget balance of $1.5 million carried forward from the prior fiscal year. Budgeted expenditures were revised to reflect an aggregate increase of $1.1 million. The increases were reflective of an appropriation to the Capital Asset Reserve in the amount of $0.2 million, an increase in appropriation to General Pension Fund of $0.6 million, an increase to 40

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis appropriation to police pension fund $0.1 million, an increase to streets department of $0.1 million to clean up Schutte Park and $0.1 million to cover increased legal fees and contractual services in the City Manager department. The net result of these changes was a $0.4 million increase in the revised budget balance over the original budget balance (on a non-GAAP basis). Actual revenues and other financing sources received were above the final budgeted amounts in the General Fund by $1.2 million for the current fiscal year. The more signif icant positive variances were in permits and other licenses, transfer taxes, and court of chancery fees. These revenue increases were offset with revenue decreases in Fines & Police Revenue, inter-fund Services Receipts for Water/Wastewater and Electric and miscellaneous grant receipts. Expenditures were approximately $2.0 million under budget a result of all operating departments experiencing personnel savings through attrition. The General Fund budget balance carry forward was $3.2 million higher than budgeted a result of the above variances. Capital Asset and Debt Administration At the end of the current fiscal year, the City’s governmental and proprietary funds had invested $59.1 million and $139.5 million, respectively, in a variety of capital assets and infrastructure, as reflected in the following schedule, which is a net decrease of $1.4 million for governmental activities and a net decrease of $0.4 million for the business-type activities. The decrease in Governmental Activities is because current year depreciation was more than capitalized assets for the year. The decrease in Business-Type Activities is due to capitalization of projects that had been sitting in CIP on both Water/Wastewater Fund and the Electric Fund, and are subsequently being depreciated. Additional detailed data for all capital assets of the City is presented in the Notes to the Basic Financial Statements in Note 4. The following schedule is presented in millions of dollars. Governmental Business-Type Activities Activities Total 2017 2018 2017 2018 2017 2018 Depreciable Assets, Net Buildings $ 23.6 $ 23.0 $ - $ - $ 23.6 $ 23.0 Equipment 2.5 2.5 - - 2.5 2.5 Vehicles 1.7 1.5 - - 1.7 1.5 General Infrastructure 26.8 26.3 - - 26.8 26.3 Utility, Plant, Buildings, and - - Infrastructure - - 134.9 134.0 134.9 134.0 Other 0.5 0.4 - - 0.5 0.4 Non-depreciable Assets Land 4.7 4.7 1.6 1.6 6.3 6.3 Construction in Progress 0.7 0.7 3.4 3.9 4.1 4.6 $ 60.5 $ 59.1 $ 139.9 $ 139.5 $ 200.4 $ 198.6 The chart below shows that the Net OPEB Liability for the Governmental Activities decreased by $5.9 million, and the Net OPEB Liability for the Business-Type Activities decreased as well by $2.7 million. Additional detailed data for all debt of the City is presented in the Notes to the Basic Financial Statements in Note 5. 41

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis The City Charter limits the amount of general obligation debt the City can issue in any one year to .25% of the taxable assessed value of real property within the City. The aggregate of amounts borrowed for which the full faith and credit of the City is pledged cannot exceed 5.0% of assessed value of real property within the City boundaries. The City has used 3.7% of its debt limit. The City of Dover’s non-current liabilities as of June 30, 2017 and 2018 are as follows (presented in millions of dollars): Governmental Business-Type Activities Activities Total 2017 2018 2017 2018 2017 2018 Non-current liabilities Liability for Compensated Absences $ 2.4 $ 2.3 $ 0.7 $ 0.7 $ 3.1 $ 3.0 Bonds (Net of Discount/Issuance Cost) 6.2 5.9 30.7 29.2 36.9 35.1 Net OPEB Liability 32.1 26.2 8.2 5.5 40.3 31.7 Net Pension Liability 17.0 14.7 11.5 10.9 28.5 25.6 $ 57.7 $ 49.1 $ 51.1 $ 46.3 $ 108.8 $ 95.4 Economic Factors and Next Year’s Budgets and Rates The City developed the fiscal year 2018 budget in accordance with the City’s financial policies ensuring all budgets are balanced and reserve requirements were adhered to. The following changes over fiscal year 2018 were incorporated into the fiscal year 2019 budget.  Property taxes remained the same as the prior fiscal year.  A power cost adjustment credit was decreased from $0.00855 to $0.00382 for the electric utility due to higher power supply cost.  The City’s headcount increased by 4 full-time positions and 3 part-time positions. Overall an increase of 7 positions were as follows: Parks and Recreation increased by 4 full-time positions, Procurement and Inventory increased by 2 full-time positions, Electric Administration decreased by 2 full-time positions, Water Management increased by 1 full- time position and Wastewater Management reduced by 1 full-time position. City Clerk increased by 1 part-time position, Library increased by 1 part-time position, Human Resources increased by 2 part-time positions and Electric Engineering reduced by 1 part- time position.  Increases in wages based on collective bargaining agreements were included.  A 3.0% wage increase was included for non-bargaining employees.  Residential electric rate changed from $0.1203 to $0.1206.  Residential electric flat rate changed from $7.50 to $8.46.  Discontinued out of city trash pickup.  Funded the capital investment plan with a commitment to providing dollars for necessary infrastructure and utility improvements. The General Fund operating revenues are projected to increase by 2.4% or $1.0 million and expenditures increasing by 6.9% or $3.0 million. The net increase was made up of increases in: interfund service receipts $0.2 million, transfer taxes $0.3 million, property taxes $0.2 million, water/wastewater utility transfer $0.1 million, court of chancery $0.1 million and police pension grant $0.1 million. The increased expenditures were attributed to increases in transfer to capital project fund $1.6 million to clean up PWII and FY 19 Street program was eliminated, wages and benefits $0.9 million, street division $0.3 million for disposal of street debris and MS4 permit 42

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part B – Management’s Discussion and Analysis related items and police department $0.1 million for materials, supplies and training. The following were decreases in expense: appropriation to police pension and pension grant, retiree health insurance and other employment expenses totaling $0.2 million. The Water/Wastewater Fund operating revenues are projected to be $15.5 million which is an increase $51,600 or .3% over the prior years original budget of $15.4 million and expense projections increased 5.5% or $0.8 million. The revenue increases are for impact fees of $430,000 due to building permit increases and slight increases in miscellaneous service fees, water tank space leasing and interest earned with offsetting decreases in water/wastewater service fees of $384,800 due to usage. The increase in expenses are related to the following: program supplies for the high volume of water meter replacements or repairs $0.1 million, consulting services for rate study and interfund services totaling $0.1 million, the transfer to the general fund $0.1 million and transfer to the capital project fund $0.7 million which includes a transfer to the electric capital fund for the city-wide ERP system. Additional increases to expense are for: OPEB unfunded liability $41,400 and other employment expenses $4,100. The offsetting decreases to expense are in Kent County treatment charge $0.2 million, debt service and retiree’s health care expense totaling $32,400. The Electric Fund overall revenues are projected to increase by 1.9% or $1.6 million and expense projections decreased by 4.0% or $3.5 million. Revenue increases are due to Customer sales of $1.5 million attributed to higher sales and increases in residential rates and utility tax is projected to increase by $0.1 million. Offsetting decreases in revenue are slight and affects miscellaneous revenue, green energy revenue and interest earnings. Expenses are decreasing by $3.5 million mainly due to decreases in the transfer to the Rate Stabilization reserve of $5.2 million, appropriation to OPEB unfunded liability $1.0 million, pension appropriation for unfunded liability $1.0 million, power supply $1.4 million and wages and benefits $0.1 million. Offsetting increases are to: Generation $0.3 million, operating expenses $0.1 million due to increased repairs at Weyandt Hall and training, conference and travel, contractual and legal expenses related to the IRP $0.1 million and internal service allocations $0.2 million. The City also budgeted a distribution of earnings to customers of $2.9 million or 3.45% of revenue, a result of lower cost of service than projected for fiscal year 2017. The electric power supply cost increased $7.0 million but was offset by a $7.2 million decrease in generation expense, netting a decrease in power supply cost of $0.2 million. Transfers to the capital project fund and depreciation reserve were included in the current budget for a total increase of $3.9 million. Other increases in expense are to: the appropriation to the capital project fund $1.4 million, appropriation to OPEB $1.0 million due to an increase in the Net OPEB Liability and the appropriation to the Pension $1.0 million due to an increase in the Pension Liability. Capital projects are budgeted to be financed with a $6.4 million transfer from operating income, and $0.5 million of developer charges for new development projects. The City continues to closely monitor the local economy and its impact on growth and revenues. Revenue enhancements, rate increases, and potential cost reductions will continue to be reviewed in order to maintain the City’s financial policies. Contacting the City’s Financial Management This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact Ms. Lori Peddicord, Controller/Treasurer at 302-736-4452 (TTY/TDD Operator 1-800-855-1155). 43

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2018 Comprehensive Annual Financial Report for the City of Dover, Delaware FINANCIAL SECTION PART C BASIC FINANCIAL STATEMENTS 45

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2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Basic Financial Statements City of Dover, Delaware Statement of Net Position June 30, 2018 Governmental Business-Type Activities Activities Total Assets: Cash and Cash Equivalents $ 3,583,679 $ 13,637,142 $ 17,220,821 Investments 11,480,008 28,083,833 39,563,841 Receivables, Net 1,328,920 5,182,582 6,511,502 Internal Balances 542,693 (542,693) - Due from Other Governments 116,360 - 116,360 Inventory 110,455 4,253,523 4,363,978 Prepaid Items 266,914 934,225 1,201,139 Restricted Cash and Cash Equivalents 401,432 3,243,344 3,644,776 Restricted Investments 18,649 45,058,019 45,076,668 Capital Assets, Not Being Depreciated 5,426,930 5,537,020 10,963,950 Capital Assets, Net of Depreciation 53,689,989 133,951,459 187,641,448 Total Assets 76,966,029 239,338,454 316,304,483 Deferred Outflows of Resources: Pension related Deferred Outflows 3,100,686 756,289 3,856,975 Liabilities: Accounts Payable and Accrued Liabilities 3,020,753 6,234,622 9,255,375 Unearned Revenue 156,630 446,187 602,817 Customer Deposits - 2,317,040 2,317,040 Other 242,494 525,738 768,232 Liabilities Due within One Year 4,123,513 1,862,109 5,985,622 Non-Current Liabilities Due in more than One Year 4,030,845 28,044,945 32,075,790 Due in more than One Year - OPEB 26,216,057 5,543,420 31,759,477 Due in more than One Year - Pension 14,751,596 10,876,169 25,627,765 Total Liabilities 52,541,888 55,850,230 108,392,118 Deferred Inflows of Resources: Pension related deferred inflows 1,342,563 351,511 1,694,074 OPEB related Deferred Inflows 8,753,539 2,621,753 11,375,292 Total Deferred Inflows of Resources 10,096,102 2,973,264 13,069,366 Net Position: Net Investment in Capital Assets 53,239,906 111,894,357 165,134,263 Restricted for: Capital Projects 662,352 46,693,086 47,355,438 Public Safety Grants 286,254 - 286,254 Verizon Grant 8,517 - 8,517 Library Grant 1,865 - 1,865 Community Development Grants 2,013 - 2,013 Other State Grants 100 - 100 Unrestricted (36,772,282) 22,683,806 (14,088,476) Total Net Position $ 17,428,725 $ 181,271,249 $ 198,699,974 The notes to financial statements are an integral part of this statement. 47

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Basic Financial Statements City of Dover, Delaware Statement of Activities For the Year Ended June 30, 2018 Net (Expense) Revenue and Program Revenues Changes in Net Position Indirect Operating Capital Grants Expenses Charges for Grants and and Governmental Business Type Expenses Allocation Services Contributions Contributions Activities Activities Total Functions/Programs Governmental Activities General Government $ 4,591,236 $ (1,147,641) $ 2,456,576 $ 2,482 $ - $ (984,537) $ - $ (984,537) Public Safety 17,441,023 - 5,367,450 955,752 - (11,117,821) - (11,117,821) Public Works 8,448,969 (712,614) 3,714,187 665,325 246,061 (3,110,782) - (3,110,782) Library and Recreation 3,106,031 - 640,061 283,081 98,500 (2,084,389) - (2,084,389) Community and Economic Development 513,857 - - 283,506 - (230,351) - (230,351) Central Services 1,547,386 (957,540) - - - (589,846) - (589,846) Financial Administration 3,358,688 (2,394,637) - - - (964,051) - (964,051) Interest Charges 129,723 - - - - (129,723) - (129,723) Total Governmental Activities 39,136,913 (5,212,432) 12,178,274 2,190,146 344,561 (19,211,500) - (19,211,500) Business Type Activities - Water/Wastewater 10,055,883 1,672,857 16,319,193 - - - 4,590,453 4,590,453 Electric 69,013,744 3,539,575 83,883,757 - - - 11,330,438 11,330,438 Total Business Type Activities 79,069,627 5,212,432 100,202,950 - - Total Primary Government $ 118,206,540 $ - $ 112,381,224 $ 2,190,146 $ 344,561 (19,211,500) 15,920,891 (3,290,609) General Revenues Taxes Property Taxes 13,065,098 - 13,065,098 Transfer Taxes 2,022,165 - 2,022,165 Earnings on Investments 100,903 208,800 309,703 Total General Revenues 15,188,166 208,800 15,396,966 Transfers 10,900,000 (10,900,000) - Total General Revenues and Transfers 26,088,166 (10,691,200) 15,396,966 Changes in Net Position 6,876,666 5,229,691 12,106,357 Net Position Beginning 10,552,059 176,041,558 186,593,617 Net Position Ending $ 17,428,725 $ 181,271,249 $ 198,699,974 The notes to financial statements are an integral part of this statement. 48

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Basic Financial Statements City of Dover, Delaware Governmental Funds Balance Sheet June 30, 2018 Total Total General Nonmajor Governmental Fund Funds Funds Assets: Cash and Cash Equivalents $ 3,028,321 $ - $ 3,028,321 Restricted Cash and Cash Equivalents - 401,432 401,432 Investments 10,053,473 - 10,053,473 Restricted Investments 18,649 - 18,649 Receivables, Net Accounts 641,106 643,699 1,284,805 Taxes 39,115 - 39,115 Due from Other Funds 617,582 375 617,957 Temporary Advances 5,000 - 5,000 Due from Other Governments - 116,360 116,360 Prepaid Items 127,208 9,990 137,198 Inventory 110,455 - 110,455 Total Assets $ 14,640,909 $ 1,171,856 $ 15,812,765 Liabilities: Accounts Payable $ 2,128,512 $ 133,814 $ 2,262,326 Unearned Revenue 154,464 2,166 156,630 Due to Other Funds 4,907 70,357 75,264 Temporary Advances - 5,000 5,000 Other 242,494 - 242,494 Total Liabilities 2,530,377 211,337 2,741,714 Deferred Inflows of Resources: Unavailable Revenue 141,642 - 141,642 Total Deferred Inflows of Resources 141,642 - 141,642 Fund Balances: Non-Spendable 259,258 9,990 269,248 Restricted 10,572 950,529 961,101 Committed 1,111,182 - 1,111,182 Assigned 2,865,373 - 2,865,373 Unassigned 7,722,505 - 7,722,505 Total Fund Balances 11,968,890 960,519 12,929,409 Total Liabilities, Deferred Inflows and Fund Balances $ 14,640,909 $ 1,171,856 $ 15,812,765 The notes to financial statements are an integral part of this statement. 49

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Basic Financial Statements City of Dover, Delaware Reconciliation of the Balance Sheet of Governmental Funds To the Statement of Net Position June 30, 2018 Amounts reported for governmental activities in the statement of net position (page 47) are different because: Total fund balances for governmental funds (Page 49) $ 12,929,409 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 59,116,919 Other assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds. Deferred inflows of resources $ 141,642 141,642 The Net Pension Liability & OPEB Liability is not due and payable in the current period; therefore, the liability and related deferred inflows/outflows are not reported in governmental funds: Deferred Outflows - Pension $ 3,100,686 Deferred Inflows - Pension (1,342,563) Deferred Inflows - OPEB (8,753,539) (6,995,416) An internal service fund (page 53) is used by the City to charge the cost of the workers' compensation fund. The assets and liabilities of the internal service fund are included in governmental activities in the statement of net position. 1,508,954 Accrual basis of bond interest paid (772) Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and, accordingly, are not reported as fund liabilities. Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. All liabilities both current and long-term are reported in the statement of net position. Compensated absences represent amounts accrued for sick leave for those employees who are vested and accrued vacation for all employees. The Net Pension Liability and OPEB Liability are not a use of current financial resources, and therefore, are not reported in the governmental funds. Current- General Obligation Bonds $ (2,964,263) Compensated Absences (1,159,250) Police Officer separation agreement (150,000) (4,273,513) Long-Term- General Obligation Bonds $ (2,912,750) Compensated Absences (1,118,095) Net Pension Liability (14,751,596) Net OPEB Liability (26,216,057) (44,998,498) (49,272,011) Total net position of governmental activities (Page 47) $ 17,428,725 The notes to financial statements are an integral part of this statement. 50

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Basic Financial Statements City of Dover, Delaware Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds For the Year Ended June 30, 2018 Total Total General Nonmajor Governmental Fund Funds Funds Revenues Fines $ 613,090 $ 508,045 $ 1,121,135 Library Revenue - General 117,178 - 117,178 Library Revenue County Reimbursement 274,930 - 274,930 Licenses and Permits 3,786,167 - 3,786,167 Sanitation Fees and Rebates 3,133,360 - 3,133,360 Recreation - 87,125 87,125 Miscellaneous Services 1,630,153 580,827 2,210,980 Property Taxes 13,103,164 - 13,103,164 Transfer Taxes - 2,022,165 2,022,165 Grants Received 584,822 1,949,885 2,534,707 Court of Chancery Fees 1,496,520 - 1,496,520 Investment Income 87,063 6,688 93,751 Total Revenues 24,826,447 5,154,735 29,981,182 Expenditures Current: General Government 1,710,100 - 1,710,100 Library Services 1,680,176 301,025 1,981,201 Public Safety and Law Enforcement 20,743,903 274,478 21,018,381 Public Works 1,681,536 236,937 1,918,473 Recreational Services 821,613 - 821,613 Streets and Sanitation Services 4,637,145 - 4,637,145 Engineering Services 263,930 - 263,930 Financial Administration 762,860 - 762,860 Garage and Stores 499,289 - 499,289 Insurance 302,258 - 302,258 Retiree Health Care 2,063,000 - 2,063,000 Employee Pension 619,000 - 619,000 Community and Economic Development 150,000 363,857 513,857 Street Lights 803,924 - 803,924 Debt Service: Principal Retirement 332,355 - 332,355 Interest and Fiscal Charges 128,455 - 128,455 Total Expenditures 37,199,544 1,176,297 38,375,841 Excess (deficiency) of Revenues over Expenditures (12,373,097) 3,978,438 (8,394,659) Other Financing Sources (Uses) Transfers In 14,220,407 - 14,220,407 Transfers Out - (3,320,407) (3,320,407) Total other Financing Sources (Uses) 14,220,407 (3,320,407) 10,900,000 Net Change in Fund Balances 1,847,310 658,031 2,505,341 Fund Balances at Beginning of Year 10,121,580 302,488 10,424,068 Fund Balances at End of Year $ 11,968,890 $ 960,519 $ 12,929,409 The notes to financial statements are an integral part of this statement. 51

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Basic Financial Statements City of Dover, Delaware Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2018 Amounts reported for governmental activities in the statement of activities (page 48) are different because: Net change in fund balances--total governmental funds (Page 51) $ 2,505,341 Governmental fund reports capital outlays as expenditures. However, in the statement of activities the cost of these assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Capitalization of net capital asset expenditures including CIP $ 2,066,950 Loss on assets disposed of during the year (14,201) Current year depreciation (3,496,182) (1,443,433) Governmental funds report the repayment of principal of general long-term debt as an expenditure but the repayment reduces the liability in the statement of net position. 332,355 Revenues that are not available to pay for current period expenditures are not reported as revenues in the funds. (87,188) Governmental funds report pension contributions as expenditures. However, in the Statement of Activities, the cost of pension benefits earned net of employer contributions is reported as pension expense 2,252,199 Except for amounts reported as deferred inflows/outflows, changes in the net pension liability are reported as pension expense in the statement of activities. (777,362) Decreases in operating expenses due to the decrease in OPEB expense for the amortization of deferred outflows and inflows of resources related to the net OPEB liability. (2,193,482) Under the modified accrual basis of accounting used in the governmental funds, expenditures are not recognized for the transactions that are not normally paid with expendable available financial resources. In the statement of activities, however, which is presented on the accrual basis, expenses and liabilities are reported regardless of when financial resources are available. In addition, assets are not recognized in governmental funds unless they represent current financial resources but are recognized in the statement of activities as they accrue. The following differences, therefore, occur between the statement of activities and the governmental funds. Decrease in compensated absences $ 82,409 Police separation agreement payout 40,000 Bond interest accrual (1,267) Increase in OPEB Liability 5,904,420 6,025,562 An internal service fund is used by the City to charge the costs of workers' compensation insurance to individual funds. The change in net position of the internal service fund is transferred to the governmental funds and amounts attributable to internal charges are then allocated to functional expenditures. Net revenue is allocated back to respective functions and business type activities, as appropriate. 262,674 Change in net position of governmental activities (Page 48) $ 6,876,666 The notes to financial statements are an integral part of this statement. 52

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Basic Financial Statements City of Dover, Delaware Statement of Net Position - Proprietary Funds Proprietary Funds June 30, 2018 Governmental Business-type Activities Activities Water/ Electric Total Wastewater Revenue Enterprise Internal Fund Fund Funds Service Fund Assets Current Assets: Cash and Cash Equivalents $ 4,067,833 $ 9,569,309 $ 13,637,142 $ 555,358 Investments 7,910,126 20,173,707 28,083,833 1,426,535 Receivables, Net 632,964 4,549,618 5,182,582 5,000 Due from Other Funds 27,818 3,822 31,640 - Inventory 104,699 4,148,824 4,253,523 - Prepaid Items 1,732 932,493 934,225 129,716 Total Current Assets 12,745,172 39,377,773 52,122,945 2,116,609 Non-Current Assets: Restricted Assets Cash 923,774 2,319,570 3,243,344 - Investments 6,300,037 38,757,982 45,058,019 - Capital Assets, Not Being Depreciated 1,075,643 4,461,377 5,537,020 - Capital Assets, Net of Depreciation 58,139,863 75,811,596 133,951,459 - Total Non-Current Assets 66,439,317 121,350,525 187,789,842 - Total Assets 79,184,489 160,728,298 239,912,787 2,116,609 Deferred Outflows of Resources: Pension Related Deferred Outflows 77,010 679,279 756,289 - Liabilities Current Liabilities: Accounts Payable and Accrued Expenses 1,367,588 4,867,034 6,234,622 607,655 Due to Other Funds - Charges 183,055 391,278 574,333 - Unearned Revenue - 446,187 446,187 - Accrued Interest Payable 102,012 423,726 525,738 - Customer Deposits - 2,317,040 2,317,040 - Revenue Bonds Payable 824,960 765,000 1,589,960 - Liability for Compensated Absences 89,469 182,680 272,149 - Total Current Liabilities 2,567,084 9,392,945 11,960,029 607,655 Non-Current Liabilities: OPEB Liability 2,128,196 3,415,224 5,543,420 - Net Pension Liability 3,647,263 7,228,906 10,876,169 - Revenue Bonds Payable 10,487,439 17,125,000 27,612,439 - Liability for Compensated Absences 141,132 291,374 432,506 - Total Non-Current Liabilities 16,404,030 28,060,504 44,464,534 - Total Liabilities 18,971,114 37,453,449 56,424,563 607,655 Deferred Inflows of Resources: Pension Related Deferred Inflows 84,850 266,661 351,511 - OPEB Related Deferred Inflows 1,016,942 1,604,811 2,621,753 - Total Deferred Inflows of Resources 1,101,792 1,871,472 2,973,264 - - Net Position Net Investment in Capital Assets 49,511,384 62,382,973 111,894,357 - Restricted for Capital Construction 5,615,534 41,077,552 46,693,086 - Unrestricted 4,061,675 18,622,131 22,683,806 1,508,954 Total Net Position $ 59,188,593 $ 122,082,656 $ 181,271,249 $ 1,508,954 The notes to financial statements are an integral part of this statement. 53

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Basic Financial Statements City of Dover, Delaware Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds For the Year Ended June 30, 2018 Governmental Business-type Activities Activities Water/ Electric Total Wastewater Revenue Enterprise Internal Fund Fund Funds Service Fund Operating Revenues Charges for Services $ 13,810,690 $ 82,749,450 $ 96,560,140 $ - Miscellaneous Services/Income 2,501,095 1,131,942 3,633,037 830,105 Total Operating Revenues 16,311,785 83,881,392 100,193,177 830,105 Operating Expenses Water 370,080 - 370,080 - Wastewater 930,237 - 930,237 - Water Treatment Plant 1,317,408 - 1,317,408 - Water/Wastewater Engineering 296,285 - 296,285 - Kent County Wastewater Treatment 3,985,933 - 3,985,933 - General Administrative 1,904,684 5,957,816 7,862,500 396,169 Power Supply - 47,221,198 47,221,198 - Transmission/Distribution - 2,559,819 2,559,819 - Engineering - 1,034,690 1,034,690 - Metering - 204,400 204,400 - Systems Operations - 542,032 542,032 - Utility Tax - 1,255,094 1,255,094 - Depreciation 2,359,886 4,772,651 7,132,537 - Contractual Services - - - 15,829 Taxes - - - 40,949 Retirees Health Care 242,200 1,820,300 2,062,500 - Self Insurance-Workers' Compensation - - - 121,636 Total Operating Expenses 11,406,713 65,368,000 76,774,713 574,583 Operating Income/Loss 4,905,072 18,513,392 23,418,464 255,522 Non-Operating Revenues (Expenses) Interest Earned: Operating Funds 140,852 353,782 494,634 - Reserve Funds 107,453 650,956 758,409 27,999 Net Decrease in Fair Value of Investments (211,787) (832,456) (1,044,243) (20,847) Interest and Fiscal Charges (322,027) (848,204) (1,170,231) - Distribution of Earnings - PCA Credit - (6,337,115) (6,337,115) - Gain on Sale of Assets 7,408 2,365 9,773 - Total Non-Operating Revenue (expenses) (278,101) (7,010,672) (7,288,773) 7,152 Income before Contributions and Transfers 4,626,971 11,502,720 16,129,691 262,674 Transfers Out (900,000) (10,000,000) (10,900,000) - Total transfers (900,000) (10,000,000) (10,900,000) - Change in Net Position 3,726,971 1,502,720 5,229,691 262,674 Total Net Position--Beginning 55,461,622 120,579,936 176,041,558 1,246,280 Total Net Position--Ending $ 59,188,593 $ 122,082,656 $ 181,271,249 $ 1,508,954 The notes to financial statements are an integral part of this statement. 54

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Basic Financial Statements City of Dover, Delaware Statement of Cash Flows - Proprietary Funds For the Year Ended June 30, 2018 Governmental Business-type Activities Activities Water Electric Total Wastewater Revenue Enterprise Internal Fund Fund Funds Service Fund Cash Flows from Operating Activities Receipts from Customers $ 16,622,141 $ 84,756,355 $ 101,378,496 $ - Payments to Suppliers (including Purchased Power) (5,923,089) (52,041,726) (57,964,815) (289,114) Payments to Employees (2,284,683) (4,536,228) (6,820,911) - Payments of Personnel Related Costs (1,444,664) (2,422,623) (3,867,287) 782,229 Internal Activity-Payments from (to) Other Funds (3,150) (177,864) (181,014) - Other Receipts (Payments) including Claims Paid (43,244) (1,290,129) (1,333,373) (506,305) Net Cash Provided by (used for) Operating Activities 6,923,311 24,287,785 31,211,096 (13,190) Cash Flows from Noncapital Financing Activities Transfers Out (900,000) (10,000,000) (10,900,000) - Distribution to Customers - PCA Credit - (6,337,115) (6,337,115) - Net Cash Used for Noncapital Financing Activities (900,000) (16,337,115) (17,237,115) - Cash Flows from Capital and Related Financing Activities Acquisition and Construction of Capital Assets (2,210,177) (4,474,270) (6,684,447) - Principal Paid on Revenue Bond Maturities (798,689) (730,000) (1,528,689) - Interest Paid on Capital Debt (322,027) (848,204) (1,170,231) - Net Cash Used for Capital and Related Financing Activities (3,330,893) (6,052,474) (9,383,367) - Cash Flows from Investing Activities Interest on Investments 140,852 353,782 494,634 - Redemption of Investment Securities 455,995 696,573 1,152,568 - Purchase of Investment Securities (1,693,755) (1,619,470) (3,313,225) 5,104 Interest on Restricted Cash 107,453 650,956 758,409 - Net Cash Provided by (used for) Investing Activities (989,455) 81,841 (907,614) 5,104 Net Increase/Decrease in Cash and Cash Equivalents 1,702,963 1,980,037 3,683,000 (8,086) Cash and cash equivalents June 30 (incl. $422,798 for W/WW fund and $2,518,854 for Electric fund reported in restricted accounts) 3,288,644 9,908,842 13,197,486 563,444 Cash and cash equivalents July 1 (including $923,774 for W/WW fund and $2,319,570 for Electric fund reported in restricted accounts) $ 4,991,607 $ 11,888,879 $ 16,880,486 $ 555,358 Reconciliation of Operating Income to Net Cash Provided by (Used for) Operating Activities: Operating Income $ 4,905,072 $ 18,513,392 $ 23,418,464 $ 255,522 Adjustments to Reconcile Operating Income to Net Cash provided by (Used for) Operating Activities: Depreciation Expense 2,359,887 4,772,650 7,132,537 - Effect of Changes in Operating Assets and Liabilities: Receivables 327,798 789,862 1,117,660 6,956 Due from Other Funds (17,442) 15,407 (2,035) - Inventory 20,120 562,260 582,380 - Prepaid Items (1,732) (459,267) (460,999) (115,966) NPA for pension - - - - Deferred outflow of resources 35,537 64,632 100,169 - Accounts payable and accrued expenses 151,614 1,453,809 1,605,423 (159,702) Deferred revenue - (48,995) (48,995) - Due to other funds (3,150) 72,136 68,986 - Customer Deposits - 118,689 118,689 - Liability for Compensated Absences 51,321 (85,164) (33,843) - Net OPEB Liability (1,011,400) (1,575,928) (2,587,328) - Net pension liability (211,011) (383,777) (594,788) - Deferred inflow of resources Pension (59,037) (107,374) (166,411) - Deferred inflow of resources OPEB 375,734 585,453 961,187 - Net Cash Provided by Operating Activities $ 6,923,311 $ 24,287,785 $ 31,211,096 $ (13,190) Non-Cash Investing, Capital and Financing Activities: Change in Fair Value of Investments $ (211,787) $ (832,456) $ (1,044,243) $ (20,847) The notes to financial statements are an integral part of this statement. 55

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Basic Financial Statements City of Dover, Delaware Statement of Net Position Fiduciary Funds June 30, 2018 Pension and Other Postemployment Agency Benefit Trust Funds Funds Assets Cash and Cash Equivalents $ 3,911,534 $ 704,061 Investments at Fair Value - Mutual Funds 87,449,427 - Receivables - 52,918 Prepaid Items - 9,842 Total Assets 91,360,961 766,821 Liabilities Vouchers Payable & Deposit Payable 1,250 109,547 Due to Agencies - 657,274 Total Liabilities 1,250 $ 766,821 Net Position Net Position Restricted for Pension and Retiree Health Benefits $ 91,359,711 The notes to financial statements are an integral part of this statement. 56

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Basic Financial Statements City of Dover, Delaware Statement of Changes in Net Position Fiduciary Funds For the Year Ended June 30, 2018 Pension and Other Postemployment Benefit Trust Funds Additions: Net Investment Income $ 5,960,638 City's Contribution-Payroll Based 4,710,961 City's Contribution-Lump Sum 6,599,800 Employee Contribution 195,102 State Grants 481,840 Other 1,410 Total Additions 17,949,751 Deductions: Benefit Payments 8,221,076 General Administration 30,355 Total Deductions 8,251,431 Change in Net Position 9,698,320 Net Position - Beginning 81,661,391 Net Position - Ending $ 91,359,711 The notes to financial statements are an integral part of this statement. 57

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2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C INDEX Notes to Financial Statements PAGE 1. FINANCIAL REPORTING ENTITY .............................................................. 61 A. The City of Dover , Delaware ............................................................. 61 B. Reporting Entity ............................................................................... 61 2. SIGNIFICANT ACCOUNTING POLICIES .................................................... 61 A. Basis of Presentation ........................................................................ 62 B. Basis of Accounting and Measurement Focus .................................... 63 C. New Pronouncements ....................................................................... 64 D. Capital Assets and Long -Term Liabilities ........................................... 65 E. Budget Procedures ............................................................................ 66 F. Major Transfers ................................................................................ 67 G. Inventories and Prepaid Items .......................................................... 67 H. Cash and Investments ....................................................................... 67 I. Accounts Receivable ......................................................................... 68 J. Restricted Assets ............................................................................... 68 K. Unbilled Service Receivables ............................................................. 68 L. Bond Accounts/Issuance Costs .......................................................... 68 M. Deferred Outflows/Inflows of Resources .......................................... 68 N. Fund Balances and Net Position ........................................................ 69 O. Estimates .......................................................................................... 69 P. Net Position Flow Assumption ........................................................... 70 3. DEPOSITS AND INVESTMENTS ................................................................. 70 A. Cash in Bank and Cash Equivalents ................................................. 70 B. Investments ...................................................................................... 70 4. CAPITAL ASSETS ...................................................................................... 75 5. LONG-TERM OBLIGATIONS ..................................................................... 78 A. Summary of Bonded Indebtedness by Issue ........................................ 78 B. Status as of June 30, 2018 – General Obligation Bonds .................... 78 C. Change in Long-Term Debt ............................................................... 79 D. Debt Service Requirements ............................................................... 80 6. RESTRICTED NET POSITION .................................................................... 83 7. FUND BALANCES & NET POSITION.......................................................... 83 59

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C INDEX Notes to Financial Statements PAGE 8. PROPERTY TAXES ................................................................................... 85 9. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS ........................ 85 A. Due To/From Other Funds – Charges and Allocations ....................... 85 B. Due To/From Other Funds – Temporary Advances ............................ 85 C. Interfund Transfers ......................................................................... 86 10. RENTAL INCOME ..................................................................................... 86 11. MATERIAL COMMITMENTS ..................................................................... 86 12. FORWARD CONTRACTS........................................................................... 87 13. SUBSEQUENT EVENTS .............................................................................. 89 14. INSURANCE.............................................................................................. 89 A. Health Insurance – State of Delaware ............................................... 89 B. Workers’ Compensation Fund – Self-Insurance ................................ 89 C. Other than Health or Workers’ Compensation Insurance .................. 90 15. COMPENSATED ABSENCES ...................................................................... 90 16. OTHER POST-EMPLOYMENT BENEFITS ................................................... 90 Summary of Principal Plan Provisions as of July 1, 201 5 ....................... 91 17. DEFERRED COMPENSATION PLAN .......................................................... 99 18. RETIREMENT PLANS ............................................................................. 100 A. Defined Contribution Plan .............................................................. 100 B. Defined Benefit Plans .................................................................... 101 60

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 1. FINANCIAL REPORTING ENTITY A. The City of Dover, Delaware The City of Dover, Delaware (the City) was incorporated in 1829 and is a municipal corporation governed by an elected mayor and a nine-member council. The accompanying financial statements present the financial position and operating results for fiscal year ended June 30, 2018. B. Reporting Entity In evaluating how to define the reporting entity, for financial reporting purposes, management has considered all potential component units. The decision to include a potential component unit was made by applying the criteria set forth in Generally Accepted Accounting Principles in the United States of America (GAAP). The criterion used is that set forth by Statement of Governmental Accounting Standards (GASB) number 14 and as updated by GASB 61 which defines the reporting entity as the primary government and those component units for which the primary government is financially accountable. Financial accountability is defined as appointment of a voting majority of the component unit's board and either a) the ability to impose will by the primary government, or b) the possibility that the component unit will provide a financial benefit to or impose a financial burden on the primary government. Based upon this criterion, the following is a brief review of each potential component unit addressed in defining the government’s reporting entity. Included within the reporting entity: The City provides many services as follows - police protection, street maintenance, sanitation, recreation, library, community development, public improvements, planning, safety inspections, electric generation and distribution, water and wastewater services, legislative services and general administration, including employee benefits. These functions are part of the City’s daily operations and therefore are not legally separate component units. Not included within the reporting entity: The City has joined the State of Delaware Police Pension Plan for uniformed police officers employed by the City after September 1, 1982. The plan is completely managed by the State of Delaware and, therefore, is not included in the financial statements. The Robbins Hose Volunteer Fire Company and the Capital School District are not included within the financial reporting entity because they do not meet the criteria for inclusion set forth by GAAP. 2. SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the City conform to generally accepted accounting principles as applicable to governments. A summary of the more significant policies follows: 61

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements A. Basis of Presentation Government-wide Statements: The statement of net position and the statement of activities include the financial activities of the overall government, except for fiduciary activities. Individual funds are not displayed but the statements distinguish governmental activities, generally funded by taxes and other City revenue, from business-type activities (BTAs), generally funded in whole or in part with fees charged to external users. Eliminations have been made for the doubling-up effect of certain internal activities. The government-wide statement of activities presents a comparison between direct program expenses and program revenues for each function of the City’s governmental activities and for each of the City’s identifiable business-type activities. Direct expenses are those that are specifically associated with a program, function or activity. Program revenues include a) charges paid by the recipients or beneficiaries of goods or services offered by the programs and b) grants and contributions that are restricted for meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. The City allocates the costs of certain governmental services to the costs of business-type activities (indirect expense allocation). These costs include allocated amounts of city management, centralized budgetary formulation and oversight, accounting, financial reporting, payroll, fleet and building maintenance, procurement contracting and oversight, investing and cash management, personnel services, etc. The allocations are charged to the BTAs based on the use of these services. As a matter of policy, the costs of certain governmental functions are not allocated to the business-type activities such as tax assessor, planning and zoning, public safety, library and recreation and community services. Fund Financial Statements: The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, deferred inflows/outflows, fund equity, revenues and expenditures or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The fund financial statements provide information about the City’s funds, including fiduciary funds. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as non-major funds. The City reports the following major governmental fund: General Fund The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. The City reports the following major proprietary funds: Water/Wastewater Fund This fund accounts for transactions related to water and wastewater services, including the payment of fees to Kent County for the treatment of sewage. The City also holds lease agreements with cell phone companies for equipment placed on City water towers. 62

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements Electric Revenue Fund This fund incorporates all transactions related to the generation, transmission and distribution of electricity. The City has contracted with both The Energy Authority and North American Energy Services to manage the City’s power supply and generation assets. The City reports the following non-major funds: Internal Service Fund The City has created one internal service fund to account for the activities related to self-insured Workers’ Compensation. Receipts are provided from contributions by the City’s three major funds. Expenses are related to payment of claims, premiums, and administration costs. Actuarial analyses are completed every three years to insure sufficient reserves for claims for the Workers’ Compensation Fund. Special Revenue Funds The City has eight Special Revenue Funds to account for proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. Fiduciary Funds Fiduciary funds consist of trust and agency funds and are used to report assets held by the City in a trustee or agency capacity for other purposes. These funds are, therefore, not available to support City programs. The City is the trustee for the City’s two pension plans, the Police Pension Fund and the Employee Pension Fund, as well as, the Other Post-Employment Benefit Trust. The activity of these plans is accounted for in the Basic Financial Statements. Agency funds are used to account for assets held by the City as an agent for individuals, private organizations or other governments. The City has two agency funds. The City acts as the receiving and paying agent for the Downtown Dover Partnership and the Fourth of July Celebration Committee. B. Basis of Accounting and Measurement Focus Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. All governmental funds are accounted for using the modified accrual basis of accounting and the current financial resources measurement focus. Their revenues are recognized when they become measurable and available as net current assets. Revenues that are susceptible to accrual include property taxes, grants and billable service charges. All other revenues are accounted for when they are received. Property taxes are recognized in the fiscal period for which they are levied provided they are “available”- i.e., they are collected in the current period or are expected to be collected soon enough thereafter to be used to pay liabilities of the current period. The City considers all 63

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements revenues reported in the governmental funds to be available if the revenues are collected within sixty-days after year-end, except for trash collection, which has a thirty-day collection period. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. The exception to this general rule is principal and interest on general long-term debt which is recognized when due. Also, claims and judgments and compensated absences are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. The government-wide financial statements as well as all proprietary and fiduciary trust funds are accounted for using the accrual basis of accounting and the economic resources measurement focus. Agency funds have no measurement focus but utilizes the accrual basis of accounting for reporting its assets and liabilities. A reconciliation of the governmental fund financial statements prepared on the modified accrual basis of accounting to the government-wide financial statements prepared on the accrual basis of accounting is also provided on pages 50 & 52. The types of transactions included in program revenues in the government-wide statement of activities include charges for services, operating grants and capital grants. Operating income reported in the proprietary fund financial statements includes revenue and expenses related to the continuing operations of the fund. Principal operating revenue for proprietary funds is charges to customers for sales and services. Principal operating expenses are the costs of providing goods and services, which include purchased power, administrative expenses and depreciation of capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. C. New Pronouncements GASB Statement No. 83, “Certain Asset Retirement Obligations” was issued in November 2016 and is effective for periods beginning after June 15, 2018. This Statement will enhance comparability of financial statements among governments by establishing uniform criteria for governments to recognize and measure certain AROs, including obligations that may not have been previously reported. This Statement also will enhance the decision-usefulness of the information provided to financial statement users by requiring disclosures related to those AROs. GASB Statement No. 84, “Fiduciary Activities” was issued in January 2017 and is effective for periods beginning after December 15, 2018. The requirements of this Statement will enhance consistency and comparability by (1) establishing specific criteria for identifying activities that should be reported as fiduciary activities and (2) clarifying whether and how business-type activities should report their fiduciary activities. Greater consistency and comparability enhance the value provided by the information reported in financial statements for assessing government accountability and stewardship. GASB Statement No. 85, “Omnibus 2017” was issued in March 2017 and is effective for periods after June 15, 2017. The requirements of this Statement will enhance consistency in the 64

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements application of accounting and financial reporting requirements. Consistent reporting will improve the usefulness of information for users of state and local government financial statements. GASB Statement No. 86, “Certain Debt Extinguishment Issues” was issued in May 2017 and is effective for periods after June 15, 2017. The requirements of this Statement will increase consistency in accounting and financial reporting for debt extinguishments by establishing uniform guidance for derecognizing debt that is defeased in substance, regardless of how cash and other monetary assets placed in an irrevocable trust for the purpose of extinguishing that debt, were acquired. The requirements of this Statement also will enhance consistency in financial reporting of prepaid insurance related to debt that has been extinguished. In addition, this Statement will enhance the decision-usefulness of information in notes to financial statements regarding debt that has been defeased in substance. GASB Statement No. 87, “Leases” was issued in June 2017 and is effective for periods after December 15, 2019. This Statement will increase the usefulness of governments’ financial statements by requiring reporting of certain lease liabilities that currently are not reported. It will enhance comparability of financial statements among governments by requiring lessees and lessors to report leases under a single model. This Statement also will enhance the decision- usefulness of the information provided to financial statement users by requiring notes to financial statements related to the timing, significance, and purpose of a government’s leasing arrangements. The City is currently evaluating the impact of these statements. D. Capital Assets and Long-Term Liabilities Capital assets used in Governmental Fund type operations (general capital assets) are accounted for in the government-wide financial statements rather than in the funds. Public domain ("infrastructure") general capital assets consisting of certain improvements other than buildings, including roads, bridges, curbs and gutters, streets and sidewalks, drainage systems and lighting systems, are capitalized in the government-wide financial statements along with other general capital assets. The capitalization threshold for the City’s assets is $5,000. Personal computers and related hardware valued under $5,000 are manually controlled by the Information Technology Department. All capital assets are valued at historical cost and donated capital assets are shown at acquisition value based on the developers’ cost of the infrastructure. Depreciation has been provided on general capital assets and is shown in Note 4. Depreciation has been provided over the estimated useful lives using the straight-line method. Estimated useful lives are as follows: Buildings 20 - 50 years Infrastructure 20 - 50 years Vehicles 5 - 7 years Equipment, Furniture & Fixtures 5 - 15 years Long-term liabilities expected to be financed from governmental funds and the long-term estimated liabilities for compensated absences are accounted for in the government-wide financial statements, but not in the governmental funds. Depreciation of all exhaustible capital assets used by proprietary funds is charged as an expense against their operations. Accumulated depreciation is shown in Note 4 of this section. 65

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements Depreciation in the proprietary funds has been provided over the estimated useful lives using the straight-line method. The estimated useful lives are presented below: Buildings, Mains & Plant 25 - 90 years Improvements 15 - 20 years Equipment 5 - 15 years Vehicles 5 - 7 years Capital assets are maintained substantially and reported in accordance with the Uniform System of Accounts prescribed by the Federal Energy Regulatory Commission (FERC) for the Electric Fund and the National Association of Regulatory Utility Commissioners (NARUC) for the Water/Wastewater Fund. E. Budget Procedures Legally adopted budgets are prepared for the General Fund, Water/Wastewater Fund, Electric Revenue Fund, the Internal Service Fund and the following non-major special revenue funds: Municipal Street Aid Fund, Electronic Red-Light Safety Program Fund, Community Development Block Grant Fund (Federal), State Department of Transportation Grants Fund (Community Transportation), Police Grant Funds, Substance Abuse Prevention Program Fund, Realty Transfer Tax Fund and Library Grants Fund. The General Governmental Capital Projects Fund provides for separate budgets to cover the planning and control of capital items for the governmental programs. The financial transactions of this fund are included in the financial statements of the General Fund. The Electric Improvement and Extension Fund and the Water/Wastewater Improvement and Extension Fund are sections of each utility enterprise. These sections are required by bond resolutions. Separate budgets for these funds cover the planning and control of only the capital items of the utilities. The financial transactions of these funds are included in the financial statements of the Electric Revenue Fund and the Water/Wastewater Fund. The City prepares the budget for the General Fund revenues on a modified accrual basis. The expenditures are accounted for when the purchase orders are issued. The budget and actual schedule in the legal budget format (non-GAAP), adopted by the City for the General Fund, the City’s major governmental fund, is presented in the required supplementary information section of this report. Budgets for the Electric Revenue Fund, Water/Wastewater Fund and Internal Service Fund are prepared on an accrual basis. Budgets are prepared under the assumption that the principal redemption of long-term debt must be assumed by Enterprise Fund activity in conformity with the bond ordinance. The Combining General Fund Balance Sheet and Combining Statement of Revenues, Expenditures and Changes in Fund Balances of the General Fund as well as the budget and actual schedules of the other funds are also presented in the supplementary information section of this report because they are not required to be presented elsewhere. According to the City's procedures, the preceding year's ending net budgetary balances are considered as resources for the following year. The beginning balances become operating items of revenues in the budgets. Estimated ending budgetary balances provide the balancing amount 66

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements for each budget. In accordance with the City’s financial policies, adopted by City Council, the General and Water/Wastewater funds are required to maintain an 8% minimum ending budget balance and the Electric fund is required to maintain a 12% minimum. These percentages are expressed as a percentage of operating revenues, excluding the beginning budget balance. Unassigned fund balances as a percentage of current year operating revenues for the General Fund, Water/Wastewater Fund and Electric Fund are 17.5%, 18.2% & 21.2% respectively and all are exceeding the financial policy maximum for each fund. Per the Financial policy, these overages will be addressed in the next year’s budget. F. Major Transfers The Electric Revenue Fund and Water/Wastewater Fund annually transfer a budgeted portion of their revenues to the General Fund. Transfers are also made from the Realty Transfer Tax Fund, Municipal Street Aid Fund, Electronic Red-Light Safety Program (ERLSP) Fund and Police Grant Funds to the General Fund. The purpose of these transfers is to provide routine subsidies to the General Fund for operating functions, capital project expenditures and debt service requirements. Several Special Revenue Funds represent a pass-through of State collected revenues on behalf of the City or other State revenues provided for in the State of Delaware Code. These receipts are thereafter transferred to the General Fund in support of public safety, City maintenance of State roads and other public services. Several transfers between the General Fund and the non-major governmental funds are netted in the government-wide financial statements. G. Inventories and Prepaid Items Both inventories and prepaid items are accounted for using the consumption method. Inventories are treated as operational expenditures at the time of use rather than at the time of purchase for both the governmental and proprietary funds. Prepaid expenses are reflective of insurance policies and commitments due on July 1 for the following fiscal year. The warehouse inventories, consisting mostly of parts and supplies, are maintained on a perpetual inventory basis. Inventories of all funds are valued at cost and net of reserves, utilizing a weighted moving average method of valuation. The City maintains inventory reserves to charge off any damaged or obsolete items. The Electric Revenue Fund maintains fuel inventory for the generating assets on a perpetual basis and utilizes the weighted moving average method of valuation. H. Cash and Investments The City's cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments consist of United States Government and its agencies notes and bonds, corporate bonds and common stocks and open-end mutual funds. The fair value of investments is determined by GASB 72 Fair Value Measurements. 67

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements I. Accounts Receivable Allowances for uncollectible accounts are maintained and uncollectible accounts are charged off against these allowances. The authority to write off accounts is vested with the City Council. Current balances of allowances are as follows: General Fund $375,911 Water/Wastewater Fund 102,961 Electric Revenue Fund 1,362,252 J. Restricted Assets Certain assets are restricted because their use is limited by bond covenants, endowments, or other similar third-party restrictions. Restricted assets as of June 30, 2018 total $48,721,444 including cash and cash equivalents of $3,644,776 and $45,076,668 in investments. Of this amount, $420,081 is attributed to governmental activities and $48,301,363 is attributable to business-type activities. K. Unbilled Service Receivables The City follows a policy of billing for services in accordance with billing cycle procedures. All known services rendered are billed and incorporated in the books at the end of the fiscal year. L. Bond Accounts/Issuance Costs The City recognizes bond discounts and issuance costs in governmental funds, as well as the proprietary funds, as a current period expense in accordance with GASB 65. All unamortized bond discounts and issuance costs held by the general fund and the proprietary funds have been expensed in prior years. M. Deferred Outflows/Inflows of Resources The statement of financial position, in addition to reporting assets and liabilities, reports a separate section for deferred outflows / inflows of resources. Deferred outflows / inflows of resources represent either a consumption or acquisition of net position that applies to a future period(s) and will not be recognized as an outflow / inflow (expense / revenue) of resources until that period. The City’s deferred outflows / inflows of resources are reported on the government-wide statement of net position and proprietary funds statement of net position for pension and Other Post-Employment Benefit (OPEB). For purposes of measuring the OPEB and pension liability, deferred outflows of resources and deferred inflows of resources related to OPEB and pensions, and OPEB and pension expense, information about the fiduciary net position of the OPEB and pension plans and additions to/deductions from their fiduciary net position have been determined on the same basis as they are reported by the City of Dover’s OPEB Trust and pension systems. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. The OPEB and pension systems report investments at fair value. Deferred inflows of resources related to OPEB and pensions are explained in Notes 16 and 18, respectively. 68

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements The City also reports unavailable revenue only in the governmental funds balance sheet, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. The governmental funds report unavailable revenues from property taxes, demolitions, general billings, grass cutting, police extra-duty, and State grants. N. Fund Balances and Net Position Governmental fund balances are reported based on a hierarchy of constraints on the nature or specific purpose to which the funds can be spent. The classifications of fund balance are as follows:  The non-spendable fund balance classification includes amounts that cannot be spent either because they are in a non-spendable form or because they are legally or contractually required to be maintained intact.  The restricted fund balance classification includes amounts that can be spent only for specific purposes because of the City Charter, the City Code, State or Federal laws, or externally imposed conditions by grantors or creditors.  The committed fund balance classification includes amounts that can be used only for specific purposes determined by the formal action by City Council through a motion or an adopted City Ordinance which is approved by City Council’s majority vote the highest level of decision- making authority.  The assigned fund balance classification includes amounts authorized and established by City Council. The City’s financial policies as adopted by City Council includes the purpose and description of all classes of fund balance. Modifications require City Council approval.  The unassigned fund balance classification includes amounts that have not met the criteria of the afore-mentioned fund balance classifications. The unassigned fund balance is available for expenditures as they are incurred. The general fund is the only fund that reports a positive unassigned fund balance amount. The City considers restricted, committed, or assigned amounts to have been spent when a related expenditure is incurred. Proprietary funds report net position in three categories: 1) Net investment in capital assets; 2) Restricted 3) Unrestricted Fund balances and net position are further explained in Note 7. O. Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 69

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements P. Net Position Flow Assumption Sometimes the City will fund outlays for a specific purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted and unrestricted net position and fund balance in the government-wide, proprietary fund, and governmental fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government’s policy to consider restricted net position to have been depleted before unrestricted net position is applied. 3. DEPOSITS AND INVESTMENTS A. Cash in Bank and Cash Equivalents Custodial credit risk – deposits. The bank collateralizes the City of Dover’s deposits over and above those covered by the $250,000 FDIC Insurance limit with specific securities, which are ‘marked to market’ daily against the aggregate balances. The market value of the collateral is at a minimum of or equal to 102% of the amount of applicable deposits. Collateral consists solely of either full faith and credit obligations of the United States Government or fixed rate obligations of agencies or instruments of the United States Government. On June 30, 2018, the carrying amount of unrestricted cash and cash equivalents totaled $17,220,821, and the bank cash balances totaled $18,078,761. The carrying amount of restricted cash totaled $3,644,776 and the bank cash balances on restricted accounts totaled $3,639,864, $1,905,189 of the bank balance was exposed to custodial credit risk because it was uninsured and uncollateralized. Fiduciary funds cash and cash equivalents carrying value of $4,615,595 included $4,415,990 of cash deposits, $672,541 of the bank balance was exposed to custodial credit risk because it was uninsured and uncollateralized. The restricted deposits are held by the City for bond related transactions, special purpose operating and capital grants. B. Investments The City Council has adopted an investment policy which is reviewed every two years and updated as needed for best practices. The Pension Boards have their own distinct investment policy over the Pension Trust funds since the objectives differ from those of the City. The City investments are segregated from the Pension Trust investments for clarity. As of June 30, 2018, the City had the following investments: i. Investments Held by Third Party Custodian The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The City’s government wide investments are held in several different investment capacities from mutual funds and certificate of deposit with a significant investment in debt securities.  Level 1 – Valuations based on unadjusted quoted prices for identical assets or liabilities in active markets; 70

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements  Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets or identical assets or liabilities in less active markets, such as dealer or broker markets; and  Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable, such as pricing models, discounted cash flow models and similar techniques not based on market, exchange, dealer or broker-traded transactions. The City recorded the following investments as of June 30, 2018: Fair Value Measurements Using: Quoted Prices in Significant Weighted Active Other Average Markets for Observable Maturity Identical Inputs Investment Type (Years) June 30, 2018 Assets (Level 1) (Level 2) Government-Wide: Investments by fair value level Debt securities: U.S. Government Treasuries 3.71 $ 15,257,057 $ - $ 15,257,057 Federal Agency Bond / Note 1.67 7,241,697 2,292,965 4,948,732 Municipal Obligations 1.32 4,838,267 - 4,838,267 Corporate Bonds 2.44 34,852,235 - 34,852,235 U.S. Government CMO's 1.28 8,241,479 - 8,241,479 Federal Agency Mortgage-Backed Security 9.67 1,830,617 - 1,830,617 Total Investments by fair value level $ 72,261,352 $ 2,292,965 $ 69,968,387 Other Investments, at amortized cost: Accrued Interest Earned - Money Market Mutual Funds & Equity Stock 154,339 Commercial Paper 993,840 Certificate of Deposit 11,230,978 Total other investments 12,379,157 Total Government-Wide Investments 84,640,509 Interest rate risk: As a means of limiting its exposure to fair value losses arising from rising interest rates the City’s investment policy limits U.S. Government securities and most other investments to a maximum maturity of 10 years from the date of purchase. Commercial Paper, Bankers’ Acceptances and Repurchase Agreements all have a much shorter investment period ranging from 365 days to 90 days. Short-term cash flow balances are invested up to one year. The portfolio’s weighted average maturity is 2.44 years. Credit risk: The City’s investment policy is to apply the prudent-person rule. Investments are made as a prudent person would be expected to act, with discretion and intelligence, to seek reasonable income, preserve capital and, in general, avoid speculative investments. As of June 30, 2018, the City’s fixed income and short-term investments had the following risk characteristics as compared to the Standard & Poor’s: 71

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements Policy Minimum Percent Authorized Investments Rating Category Portfolio Ratings Allocation U.S. Government N/A AA+ 18.57% U.S. Government Agency N/A AA+ 18.31% Certificates of Deposit and Short-Term A-1 Short-Term A to A-1+ 13.64% Time Deposits Long-Term AA Long-Term AA- Corporate Debt Issued by a US Corporation Commercial Paper A-1 A-1 to A-1+ 1.21% Corporate Notes/Bonds A A to AAA 42.38% Repurchase Agreements Short-Term A-1 N/A Long-Term AA Registered Investment Companies AAAm AAAm (money market funds) Municipal Obligations A A+ to AA 5.88% Concentration of credit risk: As of June 30, 2018, United States Treasury Notes represented 18.5% of the portfolio, Federal Home Loan Bank represented 5.9% of the portfolio and Federal National Mortgage Association represented 9.8% of the portfolio. No other issuer exceeded 5% of the portfolio. ii. Investments Held by Trustee for Post-Employment Benefits & Pensions The Pension Trusts and OPEB Trust have their investments exclusively in open-end mutual funds. The fair value is measured using the net asset value (NAV) as quoted in active markets in a manner consistent with the measurement principles for investment companies calculated as of June 30, 2018. 72

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements Investment Type June 30, 2018 Other Postemployment Benefits (OPEB) & Employee's Police OPEB Pension Funds (Trustee held): Plan Plan Trust Total Investments measured at the net asset value (NAV) Money market funds $ 1,953,737 $ 551,127 $ 685,670 $ 3,190,534 Fixed Income: Short-term bond funds 1,090,109 553,543 2,064,368 3,708,020 Intermediate-term bond funds 2,183,554 623,684 1,720,198 4,527,436 Long-term bond funds 2,182,892 692,686 1,722,134 4,597,712 Inflation protected bond funds 2,185,325 693,503 1,379,372 4,258,200 High Yield bond funds 2,601,478 756,870 2,052,764 5,411,112 Nontraditional bond funds 2,171,582 689,171 1,713,471 4,574,224 Total Fixed Income 12,414,940 4,009,457 10,652,307 27,076,704 Equities: Large cap value funds 4,733,911 1,502,276 4,189,558 10,425,745 Large cap growth funds 5,901,809 1,872,831 4,344,208 12,118,848 Mid-cap value funds 1,284,295 407,578 2,364,480 4,056,353 Mid-cap blend funds 1,271,842 403,626 - 1,675,468 Small value funds 2,989,466 948,978 3,033,821 6,972,265 Foreign large growth funds 2,506,936 795,368 1,647,762 4,950,066 World stock funds 2,551,577 809,681 1,677,516 5,038,774 Diversified emerging market funds 3,772,806 1,196,961 2,975,652 7,945,419 Real estate funds 3,580,477 1,136,548 2,472,760 7,189,785 Total Equities 28,593,119 9,073,847 22,705,757 60,372,723 Total investments measured at the NAV $ 41,008,059 $ 13,083,304 $ 33,358,064 $ 87,449,427 73

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements The City recorded the following OPEB and Pension investments as of June 30, 2018: Quoted Prices in Active Markets for Identical Investment Type June 30, 2018 Assets (Level 1) Other Postemployment Benfits (OPEB) & Pension Funds Investments by fair value level Mutual Funds $ 87,449,427 $ 87,449,427 Other Investments at amortized Cost Money Market Mutual Funds 3,190,534 $ 90,639,961 $ 87,449,427 Limits on investments are as follows: Category Allocation Target Percentage Employee's Police OPEB Plan Plan Trust Cash & Short Term Bonds 7.00% 8.00% 8.00% Non-traditional Bonds 5.00% 5.00% 5.00% Inflation Protected Bonds 5.00% 5.00% 4.00% Intermediate Term Bonds 5.00% 4.50% 5.00% Long Term Bonds 5.00% 5.00% 5.00% High Yield Bond 6.00% 5.50% 6.00% Large Cap Value 11.00% 11.00% 12.00% Large Cap Growth 14.00% 14.00% 13.00% Mid Cap 6.00% 6.00% 7.00% Small Cap 7.00% 7.00% 9.00% Real Estate Investment 8.00% 8.00% 7.00% Foreign Equity 12.00% 12.00% 10.00% Emerging Markets 9.00% 9.00% 9.00% 100.00% 100.00% 100.00% Custodial Credit Risk-investments: For an investment, this is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. To avoid custodial credit risk, it is the City’s policy to have its investments held at a third-party custodian in the City’s name. Interest Rate Risk is the risk that changes in market interest rates that will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The Pension and OPEB Plan’s investment policies do not formally address interest rate risk. As of June 30, 2018, the Pension 74

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements and OPEB plans had $27,076,704 in fixed income investments. The weighted average maturity for $24,215,951 of its fixed income funds was 8.54 years, the remaining balance of $2,860,753 was not available. Credit Risk: The OPEB Plan’s investments are exposed to both market risk, the risk arising from changes in fair value, and credit risk, the risk of failure by another party to perform according to the terms of a contract. The Pension and OPEB Plan’s investment balances at June 30, 2018 consisted of open ended mutual funds. Concentration of Credit Risk: Concentration of credit risk is the risk of loss attributable to the magnitude of an investment in a single issuer. The Pension and OPEB Plan’s investment policies do not formally address concentration of credit risk. The Pension and OPEB Plan’s held no positions of five percent or more in securities of a single issuer at June 30, 2018. Foreign Currency Risk is the risk that changes in the exchange rate of investments will adversely affect the fair value of an investment. As of June 30, 2018, the Pension and OPEB had no investments that were denominated in foreign currency. 4. CAPITAL ASSETS A summary of the capital asset activity for the year ended June 30, 2018 is presented below and on the following page: Beginning Ending Balance Increases Decreases Balance Governmental activities: Capital assets, not being depreciated Land $ 4,688,301 $ - $ - $ 4,688,301 Construction in progress 713,347 601,118 575,836 738,629 Total capital assets, not being depreciated 5,401,648 601,118 575,836 5,426,930 Capital assets, being depreciated: Buildings 29,337,075 - 16,017 29,321,058 Furniture and fixtures 826,322 - 4,644 821,678 Equipment 8,531,068 354,456 156,428 8,729,096 Vehicles 5,689,333 308,355 502,017 5,495,671 Lights 655,647 - - 655,647 Improvements other than buildings 53,880,316 1,378,857 - 55,259,173 Total capital assets, being depreciated 98,919,761 2,041,668 679,106 100,282,323 Less accumulated depreciation for: Buildings (5,699,983) (623,788) 15,605 (6,308,166) Furniture and fixtures (483,016) (65,337) 4,644 (543,709) Equipment (5,987,895) (409,103) 156,428 (6,240,570) Vehicles (3,994,580) (482,732) 488,228 (3,989,084) Lights (508,375) (11,530) - (519,905) Improvements other than buildings (27,087,208) (1,903,692) - (28,990,900) Total accumulated depreciation (43,761,057) (3,496,182) 664,905 (46,592,334) Total capital assets, being depreciated, net 55,158,704 (1,454,514) 14,201 53,689,989 Governmental activities capital assets, net $ 60,560,352 $ (853,396) $ 590,037 $ 59,116,919 (Continued) 75

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements (Continued) Beginning Ending Balance Increases Decreases Balance Business-type activities: Electric Revenue Fund Capital assets, not being depreciated Land $ 1,458,066 $ - $ - $ 1,458,066 Construction in progress 1,926,837 3,670,325 2,593,851 3,003,311 Total capital assets, not being depreciated 3,384,903 3,670,325 2,593,851 4,461,377 Capital assets, being depreciated Buildings 14,480,088 - - 14,480,088 Vehicles and Equipment 28,007,915 319,012 60,824 28,266,103 Transformers, Meters, T&D & Fiber Optic 63,034,454 873,726 - 63,908,180 SS, Switch Yards, Switchgears 36,140,486 429,970 19,467 36,550,989 Boiler, Turbo Generators, Cap Int - VS 37,325,396 1,796,793 - 39,122,189 Other (Streets, EST, Swr Lines, Wells, Eng & 7,662,501 - - 7,662,501 Total capital assets, being depreciated 186,650,840 3,419,501 80,291 189,990,050 Less accumulated depreciation for: Buildings (9,949,503) (365,013) - (10,314,516) Vehicles and Equipment (22,833,249) (650,403) 60,824 (23,422,828) Transformers, Meters, T&D & Fiber Optic (33,735,766) (1,763,981) - (35,499,747) SS, Switch Yards, Switchgears (13,659,290) (968,544) 130 (14,627,704) Boiler, Turbo Generators, Cap Int - VS (23,352,034) (852,760) - (24,204,794) Other (Streets, EST, Swr Lines, Wells, Eng & (5,936,915) (171,950) - (6,108,865) Total accumulated depreciation (109,466,757) (4,772,651) 60,954 (114,178,454) Total capital assets, being depreciated, net 77,184,083 (1,353,150) 19,337 75,811,596 Total electric revenue fund capital assets, net 80,568,986 2,317,175 2,613,188 80,272,973 Water/Wastewater Fund Capital assets, not being depreciated Land 163,240 - - 163,240 Construction in progress 1,473,896 1,370,904 1,932,397 912,403 Total capital assets, not being depreciated 1,637,136 1,370,904 1,932,397 1,075,643 Capital assets, being depreciated Plant, wells, pumping stations, and storage 23,487,843 928,532 34,212 24,382,163 Distribution mains, hydrants, and accessories 23,426,960 866,751 - 24,293,711 Sewage plant mains, and pumping stations 40,518,716 891,883 - 41,410,599 Vehicles and equipment 5,749,594 106,947 39,363 5,817,178 Total capital assets, being depreciated 93,183,113 2,794,113 73,575 95,903,651 Less accumulated depreciation for: Plant, wells, pumping stations, and storage (8,572,526) (669,251) 19,176 (9,222,601) Distribution mains, hydrant, and accessories (7,806,942) (448,311) - (8,255,253) Sewage plant mains, and pumping stations (15,144,861) (970,390) - (16,115,251) Vehicles and equipment (3,938,112) (271,934) 39,363 (4,170,683) Total accumulated depreciation (35,462,441) (2,359,886) 58,539 (37,763,788) Total capital assets, being depreciated, net 57,720,672 434,227 15,036 58,139,863 Total water/wastewater fund capital assets, net 59,357,808 1,805,131 1,947,433 59,215,506 Total Business-type Activities $ 139,926,794 $ 4,122,306 $ 4,560,621 $ 139,488,479 Capital Assets, not being depreciated $ 5,022,039 $ 5,041,229 $ 4,526,248 $ 5,537,020 Capital Assets, being depreciated 134,904,755 (918,923) 34,373 133,951,459 Total $ 139,926,794 $ 4,122,306 $ 4,560,621 $ 139,488,479 76

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government $ 10,432 Central services 98,180 Public safety 492,227 Public works 2,245,279 Library and recreation 615,755 Financial administration 34,309 Total depreciation expense - governmental activities $ 3,496,182 During the fiscal year there were impaired assets across the following departments/functions:  Water and Wastewater Fund Pump/Motor Well #12 and Well #12 maintenance totaling $15,036.  Electric Fund Switchgear Replacement – Kent County Administration Building totaling $19,337.  General Fund totaled vehicle and miscellaneous building improvement assets totaling $14,201. 77

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements 5. LONG -TERM OBLIGATIONS A. Summary of Bonded Indebtedness by Issue Original Remaining Interest Maturity Arbitrage Purpose Governmental Activities 2012 General Obligation Bonds $ 3,500,000 $ 2,781,263 2.60% 6/25/13 - 5/25/19 No Construction of New Library, Street Paving Program 2014 General Obligation Bonds $ 3,660,000 $ 3,095,750 Variable = 11/14/14 - 5/14/22 No Street and storm water infrastructure at the Series A (65% of Garrison Oak Technology Park, police and fire Daily LIBOR radios, and firefighter's breathing apparatus rate) plus .666% Business Type Activities Water/Wastewater Bonds 2000 State of Delaware - Revolving $ 750,000 $ 101,259 3.60% 10/1/00 - 4/1/20 No Wastewater Pump Station # 7 - Leipsic Loan Fund - Municipal Revenue 2009 State of Delaware - Revolving $ 5,581,059 $ 4,088,158 2.00% 12/1/12 - 12/1/31 No Pump station replacements/upgrades and Loan Fund - Municipal Revenue sanitary sewer main relining 2010 State of Delaware - Revolving $ 2,404,017 $ 1,710,844 2.47% 4/1/12 - 10/1/30 No Water quality improvements and main Loan Fund - Municipal Revenue replacements 2011 State of Delaware - Revolving $ 765,060 $ 617,138 2.00% 6/1/12 - 12/1/31 No Pump station replacements/upgrades and Loan Fund - Municipal Revenue sanitary sewer main relining 2013 Revenue Bonds $ 6,125,000 $ 4,795,000 3.58% 7/1/14 - 7/1/33 Yes Water and Wastewater capital project financing, refund 2003 Series WWW bonds (Coverage ratio on Water/Wastewater Bonds requires net revenues to be at least 1.2 times the maximum annual debt service) Electric Revenue Bonds 2008 Revenue Bonds $ 22,200,000 $ 17,890,000 4.81% 7/1/09 - 7/1/33 Yes Expansion and upgrades of electric system (Coverage ratio on Electric Bonds requires net revenues to be at least 1.25 times the maximum annual debt service) B. Status as of June 30, 2018 – General Obligation Bonds Long-term indebtedness of the City of Dover consists of the following general-purpose General Obligation Bonds: 2012 Series $ 2,781,263 2014 Series A 3,095,750 $ 5,877,013 The total General Obligation Bonds outstanding amount includes $2,964,263 payable within one year. 78

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements C. Change in Long-Term Debt The following tables summarize the debt transactions for the year ended June 30, 2018: i. General Long-Term Debt Payable within Item Balance 7/01/17 Additions Reductions Balance 6/30/18 One Year Compensated Absences $ 2,359,754 $ 1,562,248 $ 1,644,657 $ 2,277,345 $ 1,159,250 General Obligation Bonds 6,209,368 - 332,355 5,877,013 2,964,263 Net OPEB Liability 32,120,477 - 5,904,420 26,216,057 - Net Pension Liability 17,003,794 - 2,252,198 14,751,596 - Sub-total of General Long-Term Debt $ 57,693,393 $ 1,562,248 $ 10,133,630 $ 49,122,011 $ 4,123,513 ii. Enterprise Funds Debt – Water/Wastewater Fund Payable within Item Balance 7/01/17 Additions Reductions Balance 6/30/18 One Year Compensated Absences $ 179,280 $ 125,586 $ 74,265 $ 230,601 $ 89,469 Revenue Bonds-Water and Wastewater 5,135,000 - 340,000 4,795,000 355,000 State of Delaware Municipal Revenue Bond - Wastewater 5,150,852 - 344,297 4,806,555 352,563 State of Delaware Municipal Revenue Bond - Water 1,825,236 - 114,392 1,710,844 117,397 Net OPEB Liability 3,139,596 - 1,011,400 2,128,196 - Net Pension Liability 3,858,274 - 211,011 3,647,263 - Sub-total of Water/ Wastewater Fund $ 19,288,238 $ 125,586 $ 2,095,365 $ 17,318,459 $ 914,429 iii. Enterprise Funds Debt – Electric Revenue Fund Payable within Item Balance 7/01/17 Additions Reductions Balance 6/30/18 One Year Compensated Absences $ 559,217 $ 273,088 $ 358,251 $ 474,054 $ 182,680 Revenue Bonds 18,620,000 - 730,000 17,890,000 765,000 Net OPEB Liability 4,991,152 - 1,575,928 3,415,224 - Net Pension Liability 7,612,683 - 383,777 7,228,906 - Sub-total of Electric Revenue Fund 31,783,052 273,088 3,047,956 29,008,184 947,680 Sub-total of Enterprise Fund Debt 51,071,290 398,674 5,143,321 46,326,643 1,862,109 Grand Totals of Long-Term Debt $ 108,764,683 $ 1,960,922 $15,276,951 $ 95,448,654 $ 5,985,622 The City does not receive reimbursement for debt service from any other governmental units. The City does not have any special assessment debt or defeased bonds as of June 30, 2018. 79

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements D. Debt Service Requirements The following are the debt service requirements to maturity on the City's general obligation bonds and revenue bonds. i. Governmental Activities: 2012 General Obligation 2014 General Obligation Fiscal Bonds Bonds Series A Year Principal Interest Principal Interest Total 2019 2,781,263 65,567 183,000 24,031 3,053,861 2020 - - 183,000 22,632 205,632 2021 - - 183,000 21,111 204,111 2022 - - 2,546,750 18,038 2,564,788 Total $ 2,781,263 $ 65,567 $ 3,095,750 $ 85,812 $ 6,028,392 80

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements ii. Business-type Activities Water/Wastewater Fund 2000 Municipal Revenue 2009 Municipal Revenue 2010 Municipal Revenue 2011 Municipal Revenue 2013 Revenue Bonds Fiscal Bonds (Wastewater) Bonds (Wastewater) Bonds (Water) Bonds (Wastewater) Water/Wastewater Year Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest 2019 49,727 3,202 266,611 80,437 117,397 43,892 36,225 21,900 355,000 157,219 2020 51,532 1,396 271,970 75,078 120,481 40,808 37,541 20,584 360,000 146,493 2021 - - 277,437 69,611 123,646 37,643 38,905 19,219 375,000 135,469 2022 - - 283,013 64,035 126,895 34,395 40,318 17,806 385,000 124,069 2023 - - 288,702 58,346 130,228 31,061 41,783 16,341 395,000 112,369 2024 - - 294,505 52,543 133,649 27,640 43,302 14,823 410,000 100,294 2025 - - 300,424 46,624 137,160 24,129 44,875 13,250 215,000 90,919 2026 - - 306,463 40,585 140,764 20,526 46,505 11,619 220,000 84,256 2027 - - 312,623 34,425 144,461 16,828 48,195 9,930 225,000 77,106 2028 - - 318,906 28,142 148,257 13,033 49,946 8,178 235,000 69,281 2029 - - 325,316 21,732 152,151 9,138 51,761 6,364 245,000 60,269 2030 - - 331,855 15,193 156,148 5,141 53,642 4,483 255,000 50,269 2031 - - 338,526 8,522 79,607 1,039 55,592 2,534 265,000 39,869 2032 - - 171,807 1,718 - - 28,548 514 275,000 29,069 2033 - - - - - - - - 285,000 17,869 2034 - - - - - - - - 295,000 6,084 Total $ 101,259 $ 4,598 $ 4,088,158 $ 596,991 $ 1,710,844 $ 305,273 $ 617,138 $ 167,545 $ 4,795,000 $ 1,300,904 (Continued) 81

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements ii. Business-type Activities (Continued) Water/Wastewater/Electric Revenue Funds 2008 Revenue Bonds Business- Fiscal Electric Type Year Principal Interest Activities 2019 765,000 831,580 2,728,190 2020 800,000 798,706 2,724,589 2021 840,000 763,856 2,680,786 2022 880,000 726,756 2,682,287 2023 925,000 686,694 2,685,524 2024 970,000 644,056 2,690,812 2025 1,015,000 599,394 2,486,775 2026 1,065,000 551,928 2,487,646 2027 1,120,000 501,400 2,489,968 2028 1,175,000 446,125 2,491,868 2029 1,230,000 386,000 2,487,731 2030 1,290,000 323,000 2,484,731 2031 1,355,000 256,875 2,402,564 2032 1,420,000 187,500 2,114,156 2033 1,485,000 114,875 1,902,744 2034 1,555,000 38,875 1,894,959 Total $ 17,890,000 $ 7,857,620 $ 39,435,330 82

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements 6. RESTRICTED NET POSITION In the government-wide financial statements the restricted net position of the governmental activities and business type activities are as follows: Governmental Activities Grants-capital projects This represents the State DOT grant $ 662,352 reported in the non-major special revenue funds. Grants-public safety These represent the Police grants, ERLSP 286,254 grant and Substance Abuse Prevention grant in the special revenue type funds. Other Purposes These represent all other funds reported in 12,495 the special revenue type, except the grants reserved for capital construction and public safety. Also included is the interest from an endowment from Mary Elizabeth Paton and the verizon reserve. Total Restricted Net Position $ 961,101 Business Type Activities Net restricted position for construction purposes - expendable Water/Wastewater Restrictions on investments $ 5,615,534 imposed by bond covenants Electric Restrictions on investments 41,077,552 imposed by bond covenants Total Restricted Net Position $ 46,693,086 7. FUND BALANCES & NET POSITION In the governmental fund financial statements, fund balances are reported based on a hierarchy of constraints on the specific purposes for which the funds can be spent. Non-spendable fund balances represent items that are not in spendable form and not expected to be converted to cash. This criterion also applies to the corpus of permanent funds, which would include the Mary Elizabeth Paton library endowment. Restricted fund balances represent amounts that have externally imposed restrictions by creditors, grantors, enabling legislation or laws and regulations of other governments. The fund balances of the City’s grant funds fall into this category, as well as a couple of accounts that have contractual restrictions imposed by a third party. Committed fund balances represent amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of City Council through a motion or an adopted city ordinance. These amounts cannot be used for any other purpose unless the government removes or changes the specified use by taking the same type of action to which it previously committed the amount. 83

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements Assigned fund balances represent amounts constrained by the City’s intent to be used for specific purposes. These amounts represent the City’s capital asset appropriations. The constraints placed on assigned fund balances are implemented through internal processes such as a budget ordinance or motion of City Council. Therefore, assigned fund balances do not have the same restrictive nature as a restricted fund balance. Unassigned fund balance is the residual amount that has not met the criteria for the previously mentioned classifications. The unassigned fund balance is available for expenditures as they are incurred. The General Fund is the only fund that reports a positive unassigned fund balance amount. However, in governmental funds other than the General Fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund. The composition of the City fund balances as of June 30, 2018 is as follows: Other General Governmental Fund Funds Total Fund balances: Nonspendable: Inventory & Prepaids $ 237,664 $ 9,990 $ 247,654 Patronage Stock 16,594 - 16,594 Library Endowment 5,000 - 5,000 Subtotal Nonspendable: 259,258 9,990 269,248 Restricted for: Library Endowment Interest 2,055 - 2,055 Verizon cable franchise 8,517 - 8,517 Highway resurfacing - 662,162 662,162 ERLSP - 100 100 CDBG - 2,013 2,013 Substance Abuse Prevention - 84,833 84,833 Municiple Street Aid - 100 100 Police Grants - 201,321 201,321 Subtotal Restricted for: 10,572 950,529 961,101 Committed to: Contingency 755,483 - 755,483 Parkland 355,699 - 355,699 Subtotal Committed to: 1,111,182 - 1,111,182 Assigned to: Capital Projects 2,865,373 - 2,865,373 Unassigned 7,722,505 - 7,722,505 Total fund balances $ 11,968,890 $ 960,519 $ 12,929,409 As noted in the Introductory section of this report (page 8), the City has established the “City of Dover, Delaware Financial Policies” booklet which is a standardized set of principles that the City follows and the Finance Department manages, to ensure that the minimum fund balance policies are followed. 84

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements 8. PROPERTY TAXES Property taxes are levied under the authority of the City Charter on all real property located within the City limits. The City assessor oversees the property assessments and the City Council levies the property tax rate. The following table provides important dates with reference to property taxes. Beginning of fiscal year for taxes July 1 Tax rate levied 2nd Council Meeting in June Taxes billed July 1 Taxes due and payable at par July 31 Penalty of one and one-half percent starts August 1 Lien established on property for property taxes July 1 Tax sales of property with unpaid taxes 2 years from date of billing As of June 30, 2018, there were no material delinquent taxes. 9. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances as of June 30, 2018 is as follows: A. Due to/from other funds – Charges and Allocations Receivable Fund Payable Fund Amount General Fund Non-Major Governmental Funds $ 70,357 Water/ Wastewater Fund 183,055 Electric Revenue Fund 364,170 617,582 Water/ Wastewater Fund General Fund 710 Electric Revenue Fund 27,108 27,818 Electric Revenue Fund General Fund 3,822 Non-Major Governmental Funds General Fund 375 Total $ 649,597 B. Due to/from other funds – Temporary advances Receivable Fund Payable Fund Amount General Fund Non-major governmental funds $ 5,000 The outstanding balances between funds result mainly from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. 85

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements C. Interfund Transfers Transfers In - Transfers Out General Fund Non-Major Governmental Funds $ 3,320,407 Water/ Wastewater Fund 900,000 Electric Revenue Fund 10,000,000 Total $ 14,220,407 Transfers are generally made to provide operating capital or debt service subsidies to the receiving fund in accordance with City policy. 10. RENTAL INCOME The City currently has two lease agreements at the Garrison Oak Technical Park (GOTP) that are included in miscellaneous revenue in the General Fund. The first lease is with LS Power – White Oak Solar Energy LLC, which generated $64,580 in rental income, and the second lease is with Garrison Energy Center which generated $33,454 in rental income. The City’s Electric Revenue Fund owns a professional office building which houses the City’s Customer Service, Finance and Information Technology Departments. During the year, the last office space rental lease ended November 30, 2017. Lease revenue is $132,419 in the Electric Revenue Fund consisting of office space rental of $19,776, substation rental of $30,000 and pole attachment rentals of $82,643. The City maintains several water tower leases for a group of telecommunications companies. These are recorded as revenue of the Water/Wastewater Fund and total $390,643 in the current fiscal year. 11. MATERIAL COMMITMENTS A. The City is the guarantor on one loan for the Dover Fire Department, a separate entity from the City of Dover. The City also budgets monies to assist the volunteer fire company with payments on firefighting apparatus. The current fiscal year includes $145,614 in expenditures for Ladder #1 in the Governmental Capital Projects Fund budget. B. The City entered into a three-year management contract with The Energy Authority effective July 1, 2016 to provide a market-based approach for power supply management. The Energy Authority manages energy purchases and utilizes the City’s generating assets to provide a level of rate stability as necessary to mitigate the effects of rising and volatile energy prices. C. The City also entered into a management contract with North American Energy Services (NAES) to operate and maintain the generating assets of the electric utility in May 2006. The City extended the contract with NAES through June 30, 2020. The City has incorporated the budgets and financial activity of the plant into its procedures used for all other divisions of the electric utility. These procedures include a line item budget and adherence to City policies. All personnel are employed by NAES and personnel costs are billed to the City bi-weekly. Any capital improvements are included in the City’s capital improvement plan. The contract also provides for a monthly management fee and a performance incentive based on budget and plant performance. The fiscal year 2018 annual 86

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements cost for management and estimated incentives are $759,607 and is included in the plant- operating budget. D. The City is the guarantor on two $1.3 million loans held by the Downtown Dover Partnership. The loans are secured by two parcels in the downtown business district that the Downtown Dover Partnership is marketing for its redevelopment initiative. The principal and interest on both loans is paid monthly from rental receipts the Partnership receives from its current tenants on the properties. E. The City owes $150,000 to a former employee of the City due to a separation agreement. The former employee is owed this money over the next 4 years. 12. FORWARD CONTRACTS Pursuant to the July 1, 2011 Energy Management Agreement between the City and The Energy Authority (TEA), the City has formed an Executive Risk Management Committee (ERMC). The ERMC has adopted a Governing Policy for Energy Commodity Risk Management (Policy) aimed at addressing the energy commodity risks and the Procedures and Controls Manual for Energy Commodity Risk Management (Procedures Manual). The Procedures Manual further describes the risk management philosophy under which TEA, the City’s designated provider of energy risk management services conducts its activities. The Procedures Manual authorizes TEA to enter into physical forward transactions which shall be governed by Edison Electric Institute (EEI), North American Energy Standards Board (NAESB), or similar agreements with counterparties approved by the City. These agreements will enable the City to hedge the forward price of purchased power, natural gas or fuel oil for delivery as needed to meet its load requirements. No speculative transactions for volumes in excess of forecasted power and fuel needs are permitted. TEA also provides advisory services to the City for financial hedges in determining if they would be beneficial to mitigate market and credit risk. These contracts meet the definition of a derivative instrument as defined by GASB Statement No. 53, Accounting and Reporting for Derivative Instruments (GASB 53). However, these contracts meet the normal purchases and sales exemption of GASB 53 as the City intends to use the physical commodity in its normal utility operations to supply energy to its customers. Accordingly, these contracts are not within the scope of GASB 53 and are not recorded on the City’s Statement of Net Position. Under the Procedures manual the City will not extend credit to any potential counterparty that has a credit rating below investment grade (defined as BBB as rated by Standard & Poor’s or Baa2 as rated by Moody’s). Any counterparty that is unrated by either S & P or Moody’s must be approved by the ERMC prior to the execution of any trading activities. Credit risk is mitigated using collateral thresholds, credit limits, maximum nominal exposure and term limitations. A collateral threshold is the amount of unsecured credit granted to the counterparty. Unsecured credit exposure includes amounts owed by the counterparty, whether billed or not, and the marked-to-market differences in value of any collateral held. Any net exposure above the collateral threshold will require the posting of collateral by the counterparty. Collateral thresholds, term limitations and credit exposure limits are subject to maximums as established by the ERMC. 87

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements A summary of the contracts outstanding as of June 30, 2018 are as follows: Counterparty Credit Risk (in 1,000’s) Maximum Counterparty Amount of Loss Counterparty Counterparty or Guarantor Line Availability due to Credit Risk Collateral Description Threshold Credit Rating w/o Respect to Collateral ($) No Co llateral if expo sure under A EP Energy P artners, Inc. BBB $ 10,000 $ 9,638 $ 362 specified thresho ld No Co llateral if expo sure under B arclays B ank, P LC BBB+ $ 10,000 $ 10,000 $0 specified thresho ld No Co llateral if expo sure under B P Energy Co mpany A- $ 15,000 $ 14,424 $ 576 specified thresho ld Thresho ld is $ 18 millio n unless EDF Trading No rth A merica, LLC BBB $ 18,000 $ 18,000 $0 guaranto r's credit rating falls belo w B aa3 No Co llateral if expo sure under Exelo n Generatio n Co mpany, LLC BBB $ 30,000 $ 29,743 $ 257 specified thresho ld Up to $ 15,000 is guaranteed by M acquarie Energy, LLC A $ 15,000 $ 14,105 $ 895 M acquarie B ank Limited Unlimited guaranty fro m M o rgan M o rgan Stanley Capital Gro up, Inc BBB+ $ 10,000 $ 6,662 $ 3,338 Stanley, thresho ld set by table in co ntract Unlimited guaranty fro m M o rgan NextEra Energy M arketing, LLC. BBB+ $ 10,000 ($ 996) $ 10,996 Stanley, thresho ld set by table in co ntract NJR Energy Services Co mpany NR No thresho ld $0 $ 178 No Specified thresho ld P JM Settlement, Inc. AA No thresho ld $0 $ 21 No Specified thresho ld Unlimited guaranty fro m A GL Sequent Energy M anagement, L.P . BBB+ $ 5,000 $ 5,000 $0 Reso urces, thresho ld is $ 5,000 88

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements 13. SUBSEQUENT EVENTS A. On July 20, 2018, the Robbins Hose Company No. 1 of Dover, Delaware (Dover Fire Department), a separate entity from the City of Dover, closed on a $635,300 loan which the City of Dover has guaranteed. B. On August 22, 2018, the City of Dover closed on a $15,700,000 Refunding Bond Issue (Series 2018). The proceeds of the sale of the Bonds are to be used (i) to refund on a current refunding basis, the Series 2008 Bonds, and (ii) the costs of issuing the Bonds. C. On September 21, 2018, the City of Dover closed on an $881,400 Water and Sewer Revenue Bond with the Delaware Water Pollution Control Revolving Fund to make improvements to the following pump stations (i) Delaware Tech Pump Station (ii) Silver Lake Pump Station (iii) Walker Woods Pump Station. D. On November 16, 2018, the City of Dover closed on a $4,000,000 Water Treatment Improvement Bond with the Delaware Drinking Water State Revolving Fund (Series 2018A- SRF). The proceeds of the sale of the Bonds are to provide funds to finance all or a portion of (i) the costs associated with the costs of certain upgrades and improvements to the Borrower’s water system, and (ii) the costs of issuing the Bonds. 14. INSURANCE A. Health Insurance – State of Delaware The City participates in the State of Delaware Health Insurance Program. The State offers four health plan options. The administration of benefits is coordinated with Aetna and Blue Cross Blue Shield of Delaware. Pre-determined premiums consisting of the City and employee contributions are subsequently paid to the State of Delaware. B. Workers’ Compensation Fund – Self-Insurance On July 1, 1990, the City began self-insuring its Workers’ Compensation insurance. For this purpose, the City has established a separate fund. Claims are processed and administered by a third-party administrator. The City manages the revenue and expenditures in this fund and maintains all the records. The City maintains a fund balance to cover any incurred but not reported claims. AMI Risk Consultants completed an updated valuation in fiscal year 2014. As of June 30, 2018, there is $598,030 reserved for open claims in this fund. An appropriate umbrella policy for the excess coverage has been purchased and is in effect as of June 30, 2018. Workers’ Compensation activity is recorded in the General Fund as follows: 2018 2017 Claims payable, beginning of year $ 751,659 $ 547,958 Claims incurred 239,594 786,684 Payment of claims (393,223) (582,983) Claims payable, end of year $ 598,030 $ 751,659 89

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements C. Other than Health or Workers’ Compensation Insurance The City purchases commercial insurance policies to cover risks not insured through self- insurance funds. The City has designated a contingency account to provide for uninsured losses (See Note 7). There have been no significant reductions or settlements exceeding coverage in the past five fiscal years. 15. COMPENSATED ABSENCES The City grants a specific number of vacation days with pay to its employees. Upon termination or retirement, an employee is paid for accumulated vacation days. The City also grants one paid sick day per month to all employees, with the exception of employees covered by the International Brotherhood of Electric Workers (IBEW) contract. The IBEW employees are granted eleven sick days per year. The City of Dover follows a terminal leave policy which varies with each of the four unions as well as the non-bargaining group. The maximum accumulated sick days paid upon retirement is 150 days for 25 years of service. No accrued sick leave is paid when an employee is terminated. In the government-wide and proprietary fund financial statements, unpaid compensated absences are recorded as a liability as the vested employees' benefits accrue, to the extent it is probable that the employee will be paid for sick benefits at retirement. In governmental funds, compensated absences are recorded as expenditures as payments become due; accordingly, no liability is recorded in the Governmental Funds statement. Typically, the General Fund has been used in prior years to liquidate the liability for compensated absences recorded in governmental activities. 16. OTHER POST-EMPLOYMENT BENEFITS Plan Description On May 11, 2009, the City of Dover Other Post-Employment Benefits Trust (OPEB Trust) was established pursuant to Section 115 of the Internal Revenue Code. Policy for and management of the OPEB benefits provided to retirees are the responsibility of the City of Dover. No stand- alone financial report is issued for the OPEB Trust. The City of Dover OPEB Plan is a post retirement employee benefit program established for the purpose of funding retiree health care as provided for in Chapter 80, Article IV, Division 5 of the City Ordinances. The OPEB Trust is a single-employer defined benefit plan. The OPEB Trust provides retirement medical coverage to pensioners and their eligible dependents in the City of Dover defined benefit and defined contribution pension plans. Plan Administration Management of the plan investments are fully vested with the City of Dover OPEB Board as established in the City Code, which consists of seven members - three elected by plan members, two Council members appointed by the Council President, the City Controller/Treasurer, and the City Manager. The City Controller/Treasurer serves as an ex-officio member. Milliman of Albany, New York provides asset management advisory and consulting services to the Board. 90

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements The City purchases health insurance from the State of Delaware through a cooperative purchasing arrangement permitted by State Code. The State Office of Benefits provides the City with the medical insurance premiums by type of coverage and carrier during the budget cycle each year. The City also pays a five percent risk premium and contract administration fee for each contract in addition to the premium. Any premiums paid over or under the benefits paid out for City employees revert to the State. Membership of the plan consisted of the following at June 30, 2018: Retirees and beneficiaries receiving benefits 210 Terminated plan members entitled to but not yet receiving the benefits 11 Active plan members 371 Total 592 Substantially all City employees become eligible for post-retirement benefits if they reach retirement age while working for the City. The costs of providing these benefits are shared between the City and the retired employee. Employee Benefits and Contributions The City maintains contracts with each of the following collective bargaining units.  The International Brotherhood of Electric Workers (IBEW) union contract period is July 1, 2017 through June 30, 2020.  The American Federation of State, County, and Municipal Employees (AFSCME), Council 81 contract period is July 1, 2017 through June 30, 2020.  The Fraternal Order of Police Lodge #15 (FOP) union contract period is July 1, 2015 through June 30, 2018. The new contract has been negotiated and is awaiting final signatures from FOP at time of issuance of this report.  The Dover Organization of Employees (DOE) union contract period is July 1, 2018 through June 30, 2021. The eligibility provisions for early retirement are as follows: SUMMARY OF PRINCIPAL PLAN PROVISIONS Benefits for Civilians: A. Covered Groups: Full-time DOE (formerly IUE), IBEW, AFSCME and non-union employees and their dependents are covered. B. Eligibility: Satisfaction of either of the following eligibility requirements: 1. Unreduced Retirement: Attainment of the earlier of the following conditions: a. Later of attainment of age 65 and completion of 10 years of service. b. If hired prior to May 1, 1994, later of attainment of age 50 and completion of 20 years of service. c. If hired prior to May 1, 1994, completion of 25 years of service. (Continued) 91

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements SUMMARY OF PRINCIPAL PLAN PROVISIONS (Continued) d. If hired on or after May 1, 1994, later of attainment of age 55 and completion of 80 points (age plus service). 2. Reduced Retirement: For DOE, AFSCME and non-union members hired prior to July 1, 1994, attainment of age 55 and completion of 10 years of service. Other members who meet this condition have the option to pay 100% of the premiums for coverage. 3. Vested Termination: For DOE, AFSCME and non-union members hired prior to July 1, 1994, completion of 10 years of service. Coverage commences upon attainment of age 65. Coverage is not available to other members. 4. Active Death: Surviving spouses of members eligible for an unreduced pension upon death or for DOE and non-union members hired prior to July 1, 1994, completion of 10 years of service. C. Premium Cost Sharing: Cost-sharing varies by employee group, date of retirement and/or date of hire as follows: 1. Non-Union Employees: a. None if retired prior to July 1, 1991 b. 0% for individual coverage and 25% for spouse coverage if retired on or after July 1, 1991 and prior to July 1, 2012 c. 15% for individual and spouse coverage if retired on or after July 1, 2012 2. DOE Employees: a. None if retired prior to September 1, 1991 b. 0% for individual coverage and 25% for spouse coverage if retired on or after September 1, 1991 and prior to June 1, 2013 c. 15% for individual and spouse coverage if hired prior to December 22, 2015, upon direct retirement with an unreduced pension d. 20% for individual coverage if hired on or after December 22, 2015, upon direct retirement with an unreduced pension. The retiree will have the option to purchase dependent coverage under the City’s group rate plan at full cost to the employee/retiree. 3. IBEW Employees: a. 0% for individual coverage and 25% for spouse coverage if hired prior July 1, 1986 b. 0% for individual coverage and 100% for spouse coverage if hired on or after July 1, 1986 and prior to July 1, 2014 c. 20% for individual coverage and 100% for spouse coverage if hired on or after July 1, 2014 4. AFSCME Employees: a. 0% for individual coverage and 25% for spouse coverage if retire prior to July 1, 2015 b. 15% for individual and spouse coverage if hired prior to May 20, 2014 and retire on or after July 1, 2015 c. 20% for individual coverage and 100% for spouse coverage if hired on or after May 20, 2014 D. Benefit Duration: Retiree coverage is provided for lifetime. Spouse coverage is provided for the spouse’s lifetime. 92

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements E. Medicare Part B Reimbursement: Eligible retirees receive reimbursement of the Medicare Part B premium. The Medicare Part B average premium was $109, and the standard premium was $134 for 2017; for 2018 the average premium is $111, and the standard premium is $134. Spouses are not eligible for the reimbursement. Eligible retirees are: 1. Non-union and AFSCME employees who were hired prior to July 28, 2009. 2. IBEW employees who retired prior to July 1, 2009. 3. DOE employees who retired prior to January 31, 2010. Benefits for Police Officers: A. Covered Groups: Full-time FOP employees and their dependents are covered. Only provisions for members hired on after September 1, 1982 are shown. B. Eligibility: Satisfaction of either of the following eligibility requirements: 1. Unreduced Retirement: Attainment of the earlier of the following conditions: a. Later of attainment of age 62 and completion of 10 years of service. b. Completion of 20 years of service. c. Later of completion of 10 years of service and 75 points (age plus service). 2. Reduced Retirement: Not applicable. 3. Vested Termination: None. 4. Active Death: Surviving spouses of members eligible for an unreduced pension upon death. C. Premium Cost Sharing: 1. None if retired prior to July 1, 1991 2. 0% for individual coverage and 25% for spouse coverage if retired on or after July 1, 1991 and prior to July 1, 2012 3. 15% for individual and spouse coverage if retire on or after July 1, 2012. 4. Employees hired on or after October 9, 2015, contribute 20% for individual coverage. The retiree will have the option to purchase dependent coverage under the City’s group rate plan at full cost to the employee/retiree. D. Benefit Duration: Retiree coverage is provided for lifetime. Spouse coverage is provided for the spouse’s lifetime. E. Medicare Part B Reimbursement: Eligible retirees receive reimbursement of the Medicare Part B premium. The Medicare Part B average premium was $109, and the standard premium was $134 for 2017; for 2018, the average premium is $111, and the standard premium is $134. Spouses are not eligible for the reimbursement. Eligible retirees are members who retired prior to September 30, 2006. 93

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements Employer Contributions: The City of Dover funds the other post-employment benefits for current retirees on a pay-as-you- go basis along with funding for future benefits at a rate that is approved in the annual budget, but not actuarially determined. Additional funding has also been provided on an ad hoc basis. The employer contributions towards retiree health care premiums this fiscal year are as follows: General Government $ 3,750,427 Water/Wastewater Fund 100,197 Electric Revenue Fund 1,871,171 Total Benefit Provided $ 5,721,795 Transactions are recorded in the OPEB Trust for the payment of administrative and investment expenses and financed through investment earnings. City appropriations and other employer contributions for health care are recorded in the OPEB Trust. The OPEB Board of Trustees is responsible for the management of the trust investments. Contributions The contribution rates for the employer are established annually by the budgeting process of the City. Those rates include an employer contribution based on projected pay-as-you-go financing requirements as a percent of premiums, with an additional amount to prefund benefits, which is not actuarially determined. For the year ended June 30, 2018, the City’s average contribution rate was 29.2% of covered payroll of $19,578.050. The components of the Net OPEB liability of the City at June 30, 2018, are as follows: Other Post Employment Benefits Fund Changes in Net OPEB Liability Increase Total (Decrease) OPEB Plan Fiduciary Net OPEB Liability Net Position Liability Changes in Net OPEB Liability (a) (b) (a) - (b) Balances as of June 30, 2017 $ 69,305,071 $ 29,053,846 $ 40,251,225 Changes for the year: Service cost 1,221,869 - 1,221,869 Interest 4,497,757 - 4,497,757 Differences between expected and actual exp (6,202,130) - (6,202,130) Benefit payments (2,703,928) (2,703,928) - Employer contributions - 5,721,795 (5,721,795) Net investment income - 2,294,949 (2,294,949) Trust administrative expenses - (7,500) 7,500 Balances as of June 30, 2018 $ 66,118,639 $ 34,359,162 $ 31,759,477 94

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements Actuarial Methods and Significant Assumptions The total OPEB liability was determined by an actuarial valuation as of July 1, 2017 with liabilities projected to the June 30, 2018 measurement date, using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Rate of return. For the year ended June 30, 2018, the annual money-weighted rate of return on investments, net of investment expense, was 7.87%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Actuarial cost method Entry Age Normal Level % of Salary Amortization method Level Dollars Amortization period 30 years Asset valuation method Fair Market Value Actuarial assumptions: Investment rate of return 6.5% Discount rate 6.5% Inflation 2.5% per year included in payroll growth Healthcare cost trend rates Pre-65 Medical / Rx Initial rate of 8.5% decreasing by 0.5% annually to an ultimate rate of 4.5% Post-65 Medical / Rx Initial rate of 7.5% decreasing by 0.5% Annually to an ultimate rate of 4.5% Mortality SOA RPH-2016 Total Dataset Mortality Table fully generational using Scale MP-2016 for all employees Changes in Actuarial Assumptions or Methods The long term expected rate of return on OPEB plan investments was determined using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the target asset allocation as of June 30, 2018 are summarized in the following table: 95

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements OPEB Trust Long-Term Expected Rate of Return Long-Term Target Expected Real Asset Class Allocation* Rate of Return Cash 2.00% 0.50% Fixed Income 31.00% 3.55% Equity 60.00% 8.26% Real Estate 7.00% 7.96% Long-Term Expected Rate of Return 6.60% *The best-estimate range for the long-term expected rate of return is determined by adding expected inflation to expected long-term real returns and reflecting expected volatility and correlation. The capital market assumptions are per Milliman's investment consulting practice. Discount Rate The discount rate used to measure the total OPEB liability was 6.5%. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability, calculated using the discount rate of 6.50%, as well as what the City’s net OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.50%) or 1 percentage point higher (7.50%) than the current rate. Other Post-Employment Benefits 1% Current 1% Decrease Discount Rate Increase 5.50% 6.50% 7.50% Net OPEB liability $ 40,823,264 $ 31,759,477 $ 24,370,995 96

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate The following presents the net OPEB liability as of June 30, 2018, calculated using the health care trend rates assumed and what it would be using 1% higher and 1% lower health care trend rates: Health Care Trend Rates Assumptions 1% Current 1% Decrease Trend Rate Increase Net OPEB liability $ 23,453,178 $ 31,759,477 $ 42,032,238  The current health care trend rate starts at an initial rate of 8.5% decreasing to an ultimate rate of 5.0%.  The 1% decrease in health care trend rates would assume an initial rate of 7.5%, decreasing to an ultimate rate of 4.0%.  The 1% increase in health care trend rates would assume an initial rate of 9.5%, decreasing to an ultimate rate of 6.0%. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended June 30, 2018, the City recognized OPEB expense of $384,716 as calculated in the following chart: OPEB Expense Service cost $ 1,221,869 Interest 4,497,757 OPEB plan administrative expenses 7,500 Projected earnings on OPEB plan investments (1,984,797) Current period recognition of deferred outflows/(inflows) of resources Differences between expected and actual experience (1,898,267) Differences between projected and actual earnings on plan investments (351,796) Changes of assumptions (1,107,550) Total OPEB Expense $ 384,716 97

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements At June 30, 2018, the City reported deferred inflows of resources related to OPEB from the following sources: OPEB Trust Deferred Inflows of Resources Differences between expected and actual experience $ 6,935,224 Changes in assumptions 3,322,648 Net difference between projected and actual earnings on OPEB plan investments 1,117,420 Total Deferred Inflows of Resources $ 11,375,292 Amounts reported as deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Fiscal Year Ending June 30: 2019 $ (3,357,613) 2020 (3,357,613) 2021 (3,357,609) 2022 (1,302,457) 2023 - Thereafter - Separate Other Postemployment Benefit fund financial statements have not been issued; accordingly, they are presented as required by GASB Statement No. 34, as follows: The City of Dover, Delaware Schedule of Other Postemployment Benefits Trust Fund Net Position June 30, 2018 Other Postemployment Benefit Trust Fund ASSETS: Cash and cash equivalents $ 1,002,348 Investments at Fair Value - Mutual Funds 33,358,064 Total Assets 34,360,412 LIABILITIES: Accounts Payable 1,250 Total Liabilities 1,250 NET POSITION: Net Position Restricted for Retiree Health Benefits $ 34,359,162 98

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements The City of Dover, Delaware Schedule of Changes in Other Postemployment Benefits Trust Fund Net Position June 30, 2018 Other Postemployment Benefit Trust Fund ADDITIONS: Net Investment Income $ 2,294,949 City's Contribution-Payroll Based 1,939,295 City's Contribution-Lump Sum 3,782,500 Total Additions 8,016,744 DEDUCTIONS: Benefit Payments 2,703,928 General Administration 7,500 Total Deductions 2,711,428 Change in Net Position Net Position - Beginning 5,305,316 Net Position - Ending 29,053,846 $ 34,359,162 17. DEFERRED COMPENSATION PLAN Effective November 14, 1983, the City added a self-directed 457 Deferred Compensation Plan to its employee benefit options. The plan is administered by the International City Management Retirement Corporation (RC). The assets are held in the name of each participant with the ICMA (International City/County Management Associations) Retirement Trust. Employees are eligible to make contributions to the plan not to exceed the ceiling set by federal regulations. The City later added an alternative investment firm for the Deferred Compensation Plan with Nationwide Retirement Solutions. In May 1994, the City offered the 457 Deferred Compensation Plan to employees as their pension plan in lieu of participation in the General Employee Pension Plan. At that time 41 employees opted out of the Defined Benefit Pension Plan and enrolled in the Deferred Compensation Plan. The ICMA 457 Deferred Compensation Plan has assets of $8,930,028 (market value) as of June 30, 2018, with 131 active employees contributing $444,636. The Nationwide plan has assets of $3,484,151 (market value) as of June 30, 2018 with 17 active employees contributing $69,155. Quarterly statements are mailed to each participant by the plan administrators. All administration fees are borne by the participants. All contributions are 100% vested upon election of the plan. Employees are eligible to withdraw or rollover to another plan the employer and employee benefits upon separation of service. Withdrawals prior to age 59½ could be subject to penalty. Employees who participate in the defined benefit plan are also eligible for the 457 Deferred Compensation Plan. No matching employer contribution is made to the 457 Deferred Compensation Plan. As of June 30, 2018, there are 371 employees eligible to enroll in the 457 Deferred Compensation Plan. 99

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements 18. RETIREMENT PLANS The City participates and/or manages four retirement plans on behalf of its employees. Three of the pension plans are defined benefit plans and one is a defined contribution plan. Two of the defined benefit plans are closed to new hires. All full-time employees are required to enroll in a pension plan. During fiscal year 2018 the total wages were $22.2 million, and the total pensionable wages were $18.1 million for all full-time employees. The number of employees eligible for pension benefits as of June 30, 2018 is 371. A. Defined Contribution Plan Effective July 1, 2000, the City implemented an IRC 401a Money Purchase Plan “401a Plan,” a self-directed defined contribution plan, as an alternative choice for pension benefits. The contribution and funding requirements of the plan are both established and amended by the City. The plan is administered by the International City Management Retirement Corporation (RC). The assets are held in the name of each participant with the ICMA (International City/County Management Associations) Retirement Trust. Quarterly statements are mailed to each participant by RC. All administration fees are borne by the participants. The City provides a 3% match of the employees required contribution to the 401a Plan, and up to an additional 3% to the 401a Plan for a potential total contribution of 6%, if the employee contributes up to an additional 3% to their 457 Plan (see note 17 – Deferred Compensation Plan). The Dover Organization of Employees (DOE) union contract renewed effective July 1, 2015 through June 30, 2018. The contract changed the mandatory minimum employee contribution (MMEC) as well as the City’s minimum matching contribution as follows: Minimum Effective Date Employee Contribution City’s Match (Up To) March 27, 2016 4% 7% July 1, 2016 5% 8% The 401a Plan and 457 Plan contributions are calculated on base wages plus on-call pay, pay adjustments, and scheduled overtime. All full-time regular employees are eligible, excluding law enforcement personnel. Personnel that have elected the defined contribution plan are not eligible for the defined benefit plan. All contributions are 100% vested upon election of the plan. To be eligible for benefit payments, the participant must meet the same eligibility requirements as the participants in the defined benefit plan. Employees are eligible to withdraw or rollover to another plan the employer and employee benefits upon separation of service. Withdrawals prior to age 59 ½ could be subject to penalty. As of June 30, 2018, there were 141 full-time employees enrolled in the 401a plan. The City contributed a total of $386,498 on wages of approximately $6.4 million. Employees contributed $275,176 to the 401a Money Purchase Plan. The market value of the 401a plan assets totaled $6,409,410 as of June 30, 2018. 100

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements B. Defined Benefit Plans The City participates in three defined benefit pension plans: City of Dover Police Pension Plan (closed), City of Dover General Employee Pension Plan (closed), and State of Delaware County and Municipal Police Pension Plan. The City of Dover Police Pension Plan, a single employer defined benefit plan, covers all uniformed police officers hired prior to September 1, 1982. The City of Dover General Employee Pension Plan, a single employer defined benefit plan, covers all eligible full-time permanent employees, other than police officers hired prior to September 29, 2009. The State of Delaware County and Municipal Police Pension Plan, a multi- employer cost sharing defined benefit plan, covers all uniformed police officers hired on or after September 1, 1982. The City makes employer contributions to all three plans. The City holds on behalf of the Pension Boards of Trustees the assets of the two single-employer defined benefit plans and, accordingly, is required to prepare pension trust fund financial statements using the accrual basis of accounting. Investments are reported at fair value based on quoted market prices. Receivables and payables represent year end accruals of short-term receipts or charges. The administration of plan assets for both the Police Pension Plan and the General Employee Pension Plan is conducted by the Pension Boards as described in the subsequent disclosures. Separate pension fund financial statements for the City Police Pension and General Employees’ Pension Plan have not been issued; accordingly, they are presented as required by GASB Statement No. 34, as follows: The City of Dover, Delaware Combining Schedule of Pension Trust Fund Net Position June 30, 2018 Police General Pension Pension Totals ASSETS: Cash and cash equivalents $ 816,825 $ 2,092,361 $ 2,909,186 Investments at fair value - Mutual Funds 13,083,304 41,008,059 54,091,363 Total Assets 13,900,129 43,100,420 57,000,549 Net position held in trust for pension benefits $ 13,900,129 $ 43,100,420 $ 57,000,549 101

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements The City of Dover, Delaware Combining Schedule of Changes in Pension Trust Fund Net Position For the Year Ended June 30, 2018 Police General Pension Pension Totals Additions Net investment income $ 908,413 $ 2,757,276 $ 3,665,689 City's contribution - payroll based - 2,771,666 2,771,666 City's contribution - lump sum 811,500 2,005,800 2,817,300 Employee contribution - 195,102 195,102 State contributions 481,840 - 481,840 Other 1,410 - 1,410 Total Additions to Net Position 2,203,163 7,729,844 9,933,007 Deductions Benefit payments 1,540,946 3,976,202 5,517,148 General administration 5,207 17,648 22,855 Total Deductions From Net Position 1,546,153 3,993,850 5,540,003 Change in net position 657,010 3,735,994 4,393,004 Net Position - Beginning 13,243,119 39,364,426 52,607,545 Net Position - Ending $ 13,900,129 $ 43,100,420 $ 57,000,549 Plan member contributions are recognized in the period in which the contributions are due. Employer contributions to each plan are recognized when due, pursuant to formal commitments, to provide contributions. Benefits or refunds are recognized when due and payable in accordance with the terms of each plan. Investment management and consultant fees are paid from the Pension Trust Funds. All actuarial costs are paid from other City funds. 102

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements i. City of Dover Police Pension Plan Plan Description This contributory pension plan began on January 1, 1970 under the authority of the City Code, Chapter 62, Article III, Pension Plan, Section 62-71 through 62-84. The contribution and funding requirements of the plan are established by the City and may be amended by the City Council. It is a closed plan. The last active employee retired June 29, 2006. An officer’s pension right is vested upon the completion of 15 years of continuous service. As of June 30, 2018, there are 47 retirees and beneficiaries receiving benefits. Fully vested employees who have completed 20 to 25 years of continuous service are entitled to annual benefits equal to 2.5% of their average earnings for each year of continuous service. The maximum benefit is 62.5% of average earnings. If a participant terminates after completing 15 years of service, the participant will be eligible for a deferred benefit commencing at age 60 with a benefit accrued at the date of termination. In place of this vesting, participants may elect to receive their accumulated contributions. Disability benefits are paid to a participant who is totally or partially disabled in the performance of his or her duties. The total duty-connected disability benefit is payable monthly and equal to 75% of the monthly rate of earning at the time of disability. The partial duty-connected disability benefit is the accrued benefit at the date of disability if not less than 50% of average earnings. Disability benefits cease if the participant recovers or dies. If the disabled participant reaches his normal retirement date, the benefit is reduced by one-third. Survivor’s benefits are payable monthly in an amount equal to 75% of the participant’s rate of earnings, for a duty related death. Survivor’s benefits are payable monthly in an amount not to exceed 25% of the participant’s rate of earnings, for a non-duty related death, if the participant has completed 10 years of service. If a retired participant dies, his or her spouse receives 50% of the benefit. All benefits under the plan, including survivor’s benefits, are increased 2% per annum. There have been no changes in benefits during the valuation period by City Council. Plan Administration Management of the plan investments are fully vested with the City of Dover Police Pension Board as established in the City Code, which consists of seven members - three elected by plan members, two Council members appointed by the Council President, the Chief of Police, and the City Manager. The City Controller/Treasurer serves as an ex-officio member. Milliman of Albany, New York provides asset management advisory and consulting services to the Board. Funding Policy The City intends to continue to fund the actuarial determined contributions (ADC) as provided for in the actuarial valuation. The current year contributions are based on the parameters set forth in the actuarial valuation report as of June 30, 2018 in accordance with GASB Statement No. 67/68. The funding may be impacted by differences in actual experience and the actuarial assumptions. The employer contributions are considered by the actuaries in their determination of the actuarial determined contribution. In addition, the City has adopted in its financial policies to have any surplus in the budget balances of the prior year be transferred to the retirement benefit plans to further reduce the net pension liability. 103

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements The State contributes to the pension fund on behalf of the City based on 1) an allocation to the City based on a 0.25% surcharge on insurance policies issued in the state and the number of officers employed and 2) 75% matching grant for the annual cost of living increase (COLA) granted to police retirees on January 1 each year. For the fiscal year ending June 30, 2018, the State contributed $481,840. The ADC conforms to the entry age method as defined in GASB Statement No. 67/68. The City has interim valuations completed each year between the required biennial valuations to monitor the funding progress. The City’s actuary is Nyhart of Indianapolis, Indiana. The ADC is being amortized using a level dollar method. The amortization period is 7 years for the 2018 fiscal year and will decline by 1 each year until 1 year. Total contributions to the plan for the fiscal year ending June 30, 2018 were $1.3 million, which is 107.4% of the ADC. The Actuarially Determined Contribution is based on a closed 10-year level dollar amortization of the Unfunded Actuarial Accrued Liability (UAAL). The Schedule of Changes in the Net Pension Liability, and a Schedule of Employer Contributions are presented as Required Supplementary Information (RSI) following the notes to the financial statements. Net Pension Liability The total pension liability was determined by an actuarial valuation as of July 1, 2016 with liabilities projected to the June 30, 2018 measurement date. As of June 30, 2018, the plan was 73.95% funded. The total pension liability for benefits was $18.8 million, and the fiduciary net position was $13.9 million, which resulted in a net pension liability (NPL) of $4.9 million for the primary government. There are no active officers, therefore there is no covered payroll or ratio of the net pension liability to cover payroll. Key methods and assumptions used in calculating the total pension liability in the latest actuarial valuation, are presented below: Rate of return. For the year ended June 30, 2018, the annual money-weighted rate of return on investments, net of investment expense, was 7.16%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Actuarial Methods and Significant Assumptions Valuation date July 1, 2016 Actuarial cost method Entry Age Method Amortization method Level Dollars Amortization period Closed Asset valuation method Fair Market Value Actuarial assumptions: Investment rate of return 6.5% Discount rate 6.5% Projected salary increases none, no remaining active participants Includes inflation at 2.5% Automatic Cost of living (retirees) 2.0% Mortality RP-2014 Blue Collar with generational improvements from 2006 based on assumptions from the 2017 Social Security Admin Trustee’s Report 104

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements Changes in Actuarial Assumptions or Methods The long term expected rate of return on pension plan investments was determined using a building block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These expected future real rates of return are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocation as of June 30, 2018 are summarized in the following table: Police Pension Fund Long-Term Expected Rate of Return Long-Term Target Expected Real Asset Class Allocation* Rate of Return Cash and Equivalents 6.50% 2.26% Fixed Income 27.50% 3.62% Real Estate 5.00% 7.25% Stocks 61.00% 7.73% Long-Term Expected Rate of Return 100.00% 6.22% *The best-estimate range for the long-term expected rate of return is determined by adding expected inflation to expected long-term real returns and reflecting expected volatility and correlation. The capital market assumptions are per Milliman's investment consulting practice. Police Pension Fund Changes in Net Pension Liability Increase Total (Decrease) Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) Balances as of June 30, 2017 $ 19,185,974 $ 13,243,119 $ 5,942,855 Changes for the year: Interest on total pension liability 1,197,008 - 1,197,008 Effect of assumptions changes or inputs (44,440) - (44,440) Benefit payments (1,540,946) (1,540,946) - Employer contributions - 1,294,750 (1,294,750) Net investment income - 908,413 (908,413) Administrative expenses - (5,207) 5,207 Balances as of June 30, 2018 $ 18,797,596 $ 13,900,129 $ 4,897,467 105

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements Discount Rate The discount rate used to measure the total pension liability was 6.5%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity Analysis of Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability, calculated using the discount rate of 6.50%, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.50%) or 1 percentage point higher (7.50%) than the current rate. Police Pension Fund 1% Current 1% Decrease Discount Rate Increase 5.50% 6.50% 7.50% Net pension liability $ 6,775,556 $ 4,897,467 $ 3,297,647 Pension Expense, Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2018, the City recognized pension expense of $379,906 calculated in the following chart: Police Pension Expense July 1, 2017 to June 30, 2018 Interest on total pension liability $ 1,197,008 Projected earnings on pension plan investments (852,632) Administrative expenses 5,207 Member contributions - Current period recognition of deferred outflows/(inflows) of resources Changes of assumptions (44,440) Differences between projected and actual earnings on plan investments 74,763 Total Pension Expense $ 379,906 106

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements As of June 30, 2018, the City reported deferred outflows/(inflows) of resources related to pension from the following sources: Police Pension Plan Deferred Inflows of Resources Net difference between projected and actual earnings $ (117,277) Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Police Pension Plan Fiscal Year Ending June 30: 2019 $ 74,761 2020 (39,298) 2021 (141,583) ii. City of Dover General Employee Pension Plan Plan Description The City of Dover General Employee Pension Plan started on July 1, 1967, under the authority of the City Council, Municipal Code, Chapter 2, Article IV, Division 7, General Employee Pension Plan, Sections 2-321 through 2-370, and was made contributory on July 1, 1983. Employees contribute 3.5% of gross salary, exclusive of unscheduled overtime. An employee’s pension right is vested upon completion of 10 years of continuous service. As of the valuation date, July 1, 2018, 95 employees and 210 retirees participate in the plan. The General Employee Pension Plan is comprised of the following: Retired and beneficiaries currently receiving benefits 210 Active employees Fully Vested 95 Non-Vested 16 Deferred vested 17 The percentage of covered payroll which employees contribute is stated in the City Code and is considered by the actuaries in their determination of the actuarial determined contribution for service cost. For the year ended June 30, 2018, gross payroll earnings of $5.6 million were reported to and covered by this plan. An employee hired before May 1, 1994 is eligible for normal retirement benefits under this plan, when they attain the age of 65 with 10 years of continuous service. This same employee is eligible for early retirement when he/she attains the age of 50 with 20 years of continuous service or has completed 25 years of service. Employees hired on or after May 1, 1994 who attained age 55 and whose attained age plus years of continuous service is equal to or greater than 80 are eligible for early-unreduced retirement benefits under this plan. 107

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements The monthly benefits are 1/50 of the average actual monthly earnings multiplied by years and months of credited service upon retirement (highest 36 consecutive months in his/her final 10 years of continuous service). The monthly benefit shall not be less than $200 per month. Benefits are paid for the lifetime of the participant. Upon the death of the participant, 50% of the payments to which the participant was or would have been entitled shall be made to their eligible survivor. An employee may also take an early-reduced retirement on any date following the attainment of age 55 and the completion of 10 years of continuous service. However, the early retirement benefit is calculated in the same manner as the normal retirement benefit, at a reduced rate of one-half percent for each month computed from the date of early retirement to age 65 years. If an employee terminated before becoming vested in the plan, they are eligible to withdraw this total contribution with interest compounded annually. Survivor's benefits are payable to eligible survivors of a participant who dies after completing 10 years of continuous service. The amount of the death benefit is equal to 50% of the retirement benefit the participant would have received had he retired the day before he died. A participant is vested in the pension plan after completing 10 years of continuous service, with survivor benefits commencing when the employee would have attained the age of 65. The benefit is calculated using the normal retirement benefit formula and service at date of termination. Effective September 29, 2009 the City Council voted to close the General Employees’ Pension plan to new hires. There have been no changes in benefits during the valuation period by City Council. Plan Administration Management of the plan investments are fully vested with the City of Dover Employees’ Pension Board as established in the City Code, which consists of three elected by plan members, two Council members appointed by the Council President, the City Controller/Treasurer, and the City Manager. Milliman of Albany, New York provides asset management advisory and consulting services to the Board. Funding Policy The City intends to fund the actuarial determined contributions (ADC) as provided for in the actuarial valuation. The City uses the percentage of payroll determined by the actuary for its contributions. The funding may be impacted by differences in actual experience and the actuarial assumptions. The employer contributions are considered by the actuaries in their determination of the actuarial determined contribution. In addition, the City has adopted in its financial policies to have any surplus in the personnel related budget balances of the prior year be transferred to the retirement benefit plans to further reduce the net pension obligation. The City makes payroll-based contributions for active members in the plan. The Actuarially Determined Contribution is based on a closed 15-year level dollar amortization of the Unfunded Actuarial Accrued Liability (UAAL). The Schedule of Changes in the Net Pension Liability, and a Schedule of Employer Contributions are presented as Required Supplementary Information (RSI) following the notes to the financial statements. Net Pension Liability The total pension liability was determined by an actuarial valuation as of July 1, 2018 with liabilities projected to the June 30, 2018 measurement date. As of June 30, 2018, the plan was 68.46% funded. The total pension liability for benefits was $63.0 million, and the fiduciary net position was $43.1 million, which resulted in a net pension liability (NPL) of $19.9 million for the primary 108

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements government. The covered payroll (annual payroll of active employees covered by the plan) was $5.6 million and the ratio of the NPL to the covered payroll was 357.05%. Rate of return. For the year ended June 30, 2018, the annual money-weighted rate of return on investments, net of investment expense, was 7.12%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Key methods and assumptions used in calculating the total pension liability are presented in the following chart: Actuarial Methods and Significant Assumptions Valuation date July 1, 2018 Actuarial cost method Entry Age Amortization method Level Dollar Amortization period Closed; 15-year of the Unfunded AAL Asset valuation method Fair Market Value Actuarial Assumptions: Investment rate of return 6.5% Discount rate 6.5% Projected salary increases 3.0% Includes inflation at 2.5% Mortality RP-2014 with fully generational improvements from 2006 based on 2017 SS Admin Trustee’s Report Changes in Actuarial Assumptions or Methods The long-term expected rate of return on pension plan investments was determined using a building block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These expected future real rates of return are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocation as of June 30, 2018 are summarized in the following table: 109

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements General Employee Pension Plan Long-Term Expected Rate of Return Long-Term Target Expected Real Asset Class Allocation* Rate of Return Cash 5.50% 2.26% Fixed Income 28.50% 3.63% Stocks 61.00% 7.73% Real Estate 5.00% 7.25% Long-Term Expected Rate of Return 100.00% 6.24% *The best-estimate range for the long-term expected rate of return is determined by adding expected inflation to expected long-term real returns and reflecting expected volatility and correlation. The capital market assumptions are per Milliman's investment consulting practice. General Employee Pension Fund Changes in Net Pension Liability Increase Total (Decrease) Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) Balances as of June 30, 2017 $ 60,465,041 $ 39,364,426 $ 21,100,615 Changes for the year: Service cost 406,344 - 406,344 Interest on total pension liability 3,827,413 - 3,827,413 Changes of benefit terms 829,609 - 829,609 Effect of economic/demographic gains or losses 1,504,660 - 1,504,660 Effect of assumptions changes or inputs (99,483) - (99,483) Benefit payments (3,976,202) (3,976,202) - Employer contributions - 4,777,466 (4,777,466) Member contributions - 195,102 (195,102) Net investment income - 2,757,276 (2,757,276) Administrative expenses - (17,648) 17,648 Balances as of June 30, 2018 $ 62,957,382 $ 43,100,420 $ 19,856,962 110

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements Discount Rate The discount rate used to measure the total pension liability was 6.5%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity Analysis of Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability, calculated using the discount rate of 6.50%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.50%) or 1 percentage point higher (7.50%) than the current rate. General Employee Pension Fund 1% Current 1% Decrease Discount Rate Increase 5.50% 6.50% 7.50% Net pension liability $ 27,391,639 $ 19,856,962 $ 13,587,496 Pension Expense, Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2018, the City recognized pension expense of $3,395,305 as calculated in the following chart: General Employee Pension Expense July 1, 2017 to June 30, 2018 Service cost $ 406,344 Interest on total pension liability 3,827,413 Changes of benefit terms 829,609 Administrative expenses 17,648 Member contributions (195,102) Projected earnings on pension plan investments (2,590,496) Current period recognition of deferred outflows/(inflows) of resources Differences between expected and actual experience 374,555 Differences between projected and actual earnings on plan investments 132,340 Changes of assumptions 592,994 Total Pension Expense $ 3,395,305 111

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements As of June 30, 2018, the City reported deferred outflows/(inflows) of resources related to pension from the following sources: General Employee Pension Plan Deferred Outflows of Resources Changes in assumptions City contributions sebsequent to the $ 600,306 Differences between expected and actual experience 1,023,452 Total Deferred Outflows of Resources $ 1,623,758 Deferred Inflows of Resources Changes in assumptions $ (66,322) Differences between expected and actual experience (66,787) Net difference between projected and actual earnings (502,901) Total Deferred Inflows of Resources $ (636,010) Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: General Employee Pension Plan Fiscal Year Ending June 30: 2019 $ 844,269 2020 620,716 2021 (443,881) iii. Delaware Public Employee Retirement System - County and Municipal Police and Firefighters’ Pension Plan Plan Description and Contribution Information The City participates in the “County and Municipal Police and Firefighters’ Pension Plan” (the Plan) is a cost sharing multiple-employer defined-benefit plan established in the Delaware code. The City’s uniformed police officers whose employment with the City started on or after September 1, 1982 under the authority of the City Code, Chapter 62, Article III, Pension Plan, Section 62-71 can participate in this plan. The General Assembly is responsible for setting benefits, contributions and amending plan provisions; administrative rules and regulations are adopted and maintained by the Board of Pension Trustees (the Board). The management of the Plan is the responsibility of the Board. The Board is comprised of five members appointed by the Governor and confirmed by the State Senate, plus two ex-officio members. The daily operation is the responsibility of the Office of Pensions. Although most of 112

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements the assets of the plan are commingled with other Plans for investment purposes, the Plan’s assets may be used only for the payment of benefits to the members of the Plan in accordance with the terms of the Plan. The Plan’s service benefits calculation is 2.5% of final average monthly compensation multiplied by years of credited service up to 20 years, plus 3.5% of final average monthly compensation multiplied by years of service in excess of 20 years. For this plan, final average monthly compensation is the monthly average of the highest three consecutive years of compensation. Vesting is at five years of credited service and retirement age is 62 with five years of service; age plus credited service (but not less than 10 years) equals 75; or 20 years of credited service. As of June 30, 2018, city membership in this plan is comprised of the following: Retired and beneficiaries currently receiving benefits 60 Active employees: Fully Vested 5 years 71 Non-Vested 28 The following are brief descriptions of the Plan. For a more complete description, please refer to the DPERS CAFR on the web at http://accounting.delaware.gov/2017cafr.pdf. County and Municipal Police and Firefighters’ Pension Plan Retirement Age 62 with 5 years of service; age plus credited service (but not less than 10 years) equals 75; or 20 years of credited service. Disability Benefits Duty – Total Disability – 75% of final average compensation plus 10% for each dependent not to exceed 25% for all dependents. Duty – Partial Disability – Calculated the same as Service Benefits, subject to minimum 50% of final average compensation. Non-Duty – Same as Service Benefits, total disability subject to a minimum 50% of final average monthly compensation plus 5% of each dependent not to exceed 20% for all dependents. Partial disability is subject to a minimum of 30% of final average monthly compensation. Survivor Benefits If employee is receiving a pension, then eligible survivor receives 50% of pension; if employee is active, eligible survivor receives 50% of pension the employee would have received at age 62. If the member is killed in the line of duty, the eligible survivor receives 75% of the member’s compensation. Contributions: Employer – Determined by Board of Pension Trustees. Employer contributions were 13.6%, 13.77% and 13.8% of earnings for the Fiscal Year 2018, 2017 and 2016, respectively. The City’s contributions to the plan for years ended June 30, 2018, 2017 and 2016 were $827,827, $980,117 113

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements and $977,587, respectively, and were equal to the required contributions for each year. Total eligible full-time wages covered by the State plan were $7.0 million this fiscal year. Member – 7% of compensation. Basis of Presentation The DPERS financial statements are prepared on the accrual basis of accounting, whereby expenses are recorded when the liability is incurred, revenues are recorded in the accounting period in which they are earned and become measurable, and investment purchases and sales are recorded as of the related trade date. Plan member contributions are recognized in the period in which contributions are due. Employer contributions are recognized when due and the employer has a legal requirement to provide contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the DPERS Plan and additions to/deductions from DPERS’s fiduciary net position have been determined on the same basis as they are reported by DPERS. Employer Allocation Percentage Methodology The amounts assigned to each employer in the Schedule of Pension Amounts by Employer is each employer’s proportional share of the net pension liability, deferred outflows of resources, deferred inflows of resources, and pension expense (the Collective Pension Amounts) determined in accordance with Governmental Accounting Standards Board No. 68, Accounting and Financial Reporting for Pensions (GASB 68). Management has elected to allocate the employer’s proportionate shares of the collective pension amounts based on the percentage of actual employer contributions as documented in the Schedule of Employer Allocations. The City’s proportionate share percentage is 8.6629% for the current fiscal year, 9.0042% for the prior year and the change is a decrease of 0.3413%. Pension Liabilities, Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources related to Pensions At June 30, 2018, the City reported a net pension liability of $873,336 for its proportionate share of the collective net pension liability. The net pension liability was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the percentage of actual employer contributions. The components of the proportionate share of the net pension liability of the Plan as of June 30, 2018 were as follows (dollar values expressed in thousands): 114

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements County and Municipal Police & Firefighter's Pension Plan (dollar values expressed in thousands) (3) The Employers' (1) (2) proportionate Total Plan fiduciary share of the proportionate proportionate net pension share of the share of the liability (asset) Year pension liability net position (1)-(2) 2017 $ 29,103 $ 28,230 $ 873 2016 27,030 25,599 1,431 The City recognized pension expense of $910,825 for the year ended June 30, 2018, associated with membership within the Delaware State Police Pension Plan. As of June 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: County and Municipal Police & Firefighter's Pension Plan Deferred Outflows of Resources Differences between expected and actual experience $ 208,988 Projected and actual plan investment differences 445,137 Change in proportion 13,937 Changes of assumptions 737,328 City contributions subsequent to the measurement date 827,827 Total Deferred Outflows of Resources $ 2,233,217 Deferred Inflows of Resources Differences between expected and actual experience $ (532,597) Changes in assumptions (321,803) Change in proportion (86,387) Total Deferred Inflows of Resources $ (940,787) The City’s contributions of $827,827 are subsequent to the measurement date and therefore are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ending June 30, 2019. Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: 115

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements County and Municipal Police & Firefighter's Pension Plan Fiscal Year Ending June 30: 2019 $ 90,974 2020 90,974 2021 90,974 2022 90,974 2023 90,974 The components of collective pension expense for the year ending June 30, 2017 are as follows: County and Municipal Police & Firefighter's Pension Expense June 30, 2017 Service cost $ 1,266,603 Member contributions (514,490) Administrative expenses 13,341 Interest on the total pension liability 1,918,313 Projected earnings on plan investments (1,803,009) Recognition of deferred outflow and inflows of resources: Changes in assumptions in the measurement of total pension liability 41,676 Differences between expected and actual experience (35,951) Differences between projected and actual earnings on plan investments 24,343 Total Pension Expense $ 910,825 The proportionate share of the total pension liability for the June 30, 2017 measurement date was determined by an actuarial valuation as of June 30, 2016, with update procedures used to roll forward the total pension liability to June 30, 2017. These actuarial valuations used the following actuarial assumptions: Actuarial Assumptions Investment rate of return/Discount rate1 7.0% Projected salary increases1 2.5% + Merit Cost-of-living adjustments 0.0% Inflation is included at 2.5%, the total pension liabilities are measured based on assumptions pertaining to the interest rates, inflation rates, and employee demographic behavior in future years. The assumptions used were based on the results of an actuarial experience study conducted in 2016. It is likely that future experience will not exactly conform to these assumptions. To the extent that actual experience deviates from these assumptions, the emerging liabilities may be higher or lower than anticipated. The more the experience deviates, the larger the impact on future financial statements. 116

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements Mortality assumptions are based on the RP – 2014 tables with gender adjustments for healthy annuitants and disabled retirees and an adjusted version on MP-2015 mortality improvement scale on a fully generational basis. Projected benefit payments do not include the effects of projected ad hoc cost-of-living adjustments (ad hoc COLAs) as they are not substantively automatic. The primary considerations relevant to making this determination include the historical pattern of granting the changes and the consistency in the amounts of the changes. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by an asset allocation percentage, which is based on the nature and mix of current and expected plan investments, and by adding expected inflation. Best estimates of geometric real rates of return for each major asset class included in the Plan’s current and expected asset allocation are summarized in the following table: County and Municipal Police & Firefighter's Pension Plan Long-Term Expected Rate of Return Long-Term Expected Real Asset Rate of Return Allocation Asset class: Domestic equity 5.7% 33.5% International equity 5.7 13.7 Fixed income 2.0 26.6 Alternative investments 7.8 22.7 Cash and equivalents - 3.5 Discount Rate The discount rate for all plans used to measure the total pension liability was 7.0%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current contribution rates and that contributions from employers will be made at rates determined by the Board of Pension Trustees, actuarially determined. Based on those assumptions, the pension plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity Analysis of Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability (asset) of the Plan, calculated using the discount rate of 7.0%, as well as what the Plans’ net pension liability (asset) would be if it were calculated using a discount rate that is one-percentage-point lower or one-percentage-point higher than the current rate (dollar values expressed in thousands): 117

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part C – Notes to Financial Statements County and Municipal Police & Firefighter's Pension Plan (dollar amounts expressed in thousands) 1% Current 1% Decrease Discount Rate Increase 6.00% 7.00% 8.00% City of Dover's proportionate share of the net pension liability (asset) Separately issued financial statements for DPERS are available from the pension office at: McArdle Building, Suite 1 860 Silver Lake Blvd Dover, DE 19904 Or at the following web address: www.delawarepensions.com Following is the total of the City of Dover’s pension liabilities, pension assets, deferred outflows of resources and deferred inflows of resources related to pensions, and the pension expense and expenditures for the fiscal year ended June 30, 2018: 2018 Police General DPERS Total Net Pension Liabilities 4,897,467 19,856,962 873,336 25,627,765 Deferred Outflows of Resources - 1,623,758 2,233,217 3,856,975 Deferred Inflows of Resources 117,277 636,010 940,787 1,694,074 118

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware FINANCIAL SECTION PART D REQUIRED SUPPLEMENTARY INFORMATION 119

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part D – Required Supplementary Information 120

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part D – Required Supplementary Information CITY OF DOVER, DELAWARE GENERAL FUND Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (Non-GAAP Basis) For the Year Ended June 30, 2018 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) Beginning Balance $ 4,597,100 $ 6,072,200 $ 6,072,201 $ 1 REVENUES: Fines & Police Revenue 683,300 687,100 549,754 (137,346) 911 Fee 63,300 63,300 63,337 37 Interest Earnings 138,000 138,000 201,978 63,978 Library Revenues - General 100,000 100,000 117,178 17,178 Library Revenues - County Reimb. 300,000 300,000 274,930 (25,070) Business Licenses 1,467,000 1,467,000 1,473,259 6,259 Permits & Other Licenses 1,956,000 1,956,000 2,255,258 299,258 Miscellaneous Revenues 57,000 57,000 83,216 26,216 Police Extra Duty Fees 500,000 500,000 517,798 17,798 Property Taxes 13,025,600 13,025,600 13,065,098 39,498 Franchise Fees 688,100 688,100 656,325 (31,775) Recreation Revenue 150,000 150,000 137,914 (12,086) Sanitation Fees 3,080,400 3,080,400 3,133,360 52,960 Garrison Farm Rent 96,900 96,900 98,034 1,134 Court of Chancery Fees 1,350,000 1,350,000 1,496,520 146,520 Interfund Service Receipts Electric 3,660,100 3,660,100 3,539,575 (120,525) Interfund Service Receipts Water/Wastewater 1,716,100 1,716,100 1,672,856 (43,244) Transfer Tax 1,209,300 1,209,300 2,023,143 813,843 Grants: Green Energy Grant 98,500 98,500 98,500 - Miscellaneous Grants 31,500 31,500 2,000 (29,500) Police Pension Grant 415,000 415,000 481,840 66,840 Cable EG Grant - - 2,482 2,482 Transfer from Police Grant Funds 60,000 100,000 123,140 23,140 Transfer from Municipal Street Aid 673,100 673,100 666,079 (7,021) Transfer from Civil Traffic Penalties 511,800 511,800 508,045 (3,755) Transfer from Water/Wastewater Fund 900,000 900,000 900,000 - Transfer from Electric Fund 10,000,000 10,000,000 10,000,000 - Total Revenues 42,931,000 42,974,800 44,141,619 1,166,819 TOTAL BEGINNING BALANCE & REVENUES $ 47,528,100 $ 49,047,000 $ 50,213,820 $ 1,166,820 (Continued) 121

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part D – Required Supplementary Information (Continued) VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) EXPENDITURES: Tax Assessor $ 238,500 $ 241,200 $ 237,671 $ 3,529 Fire 774,900 774,900 767,468 7,432 Library 1,708,300 1,715,800 1,680,176 35,624 Recreation 764,200 811,500 748,020 63,480 Life Safety 499,600 500,900 462,967 37,933 Code Enforcement 449,700 452,100 415,016 37,084 Planning Commission 563,400 568,000 538,419 29,581 Public Inspections 721,000 724,800 591,796 133,004 Police 17,043,900 17,384,400 16,754,381 630,019 Streets 1,119,400 1,217,000 1,005,848 211,152 Sanitation 2,563,900 2,519,000 2,362,937 156,063 Engineering 277,700 278,800 263,930 14,870 Allocated Expenditures: City Clerk 436,700 440,700 380,060 60,640 Council 155,100 145,100 112,166 32,934 Grounds Maintenance 1,142,000 1,101,600 1,007,439 94,161 City Manager 751,500 821,600 760,963 60,637 Information Technology 777,400 781,200 726,290 54,910 Finance 1,038,900 1,041,400 944,141 97,259 Public Services-Administration 718,300 720,100 717,385 2,715 Facilities Management 629,700 640,500 640,333 167 Procurement and Inventory 605,100 610,600 615,390 (4,790) Fleet Maintenance 838,200 865,200 841,439 23,761 Customer Services 1,169,500 1,174,700 1,028,360 146,340 Human Resources 436,600 538,600 435,336 103,264 Mayor 119,300 119,300 125,004 (5,704) Insurance 735,000 735,000 704,561 30,439 Budget Appropriations Contribution to Downtown Dover Partnership 150,000 150,000 150,000 - Miscellaneous Grant Expense 25,000 25,000 1,930 23,070 Other Employment Expenses 367,500 - - - Bank & Credit Card Fees 21,000 21,000 19,008 1,992 Retiree Benefits 2,063,000 2,063,000 2,063,000 - Subtotal 38,904,300 39,183,000 37,101,434 2,081,566 Debt Service - Principal and Interest 443,100 443,100 460,810 (17,710) Transfer to Capital Asset Reserve - 214,700 214,700 - Transfer to Capital Fund for Projects 1,368,700 1,368,700 1,368,700 - Transfer to Police Pension Fund 415,000 415,000 481,840 (66,840) Transfer to Uncollectible Reserve 100,000 100,000 100,000 - Transfer to Inventory Reserve 10,000 10,000 10,000 - Transfer to Cable Franchise Reserve - - 2,482 (2,482) Appropriation to Police Pension Fund 761,500 811,500 811,500 - Appropriation to General Pension Fund 48,400 619,000 619,000 - Street Lights 810,000 810,000 803,924 6,076 Total Expenditures 42,861,000 43,975,000 41,974,390 2,000,610 Budget Balance 4,667,100 5,072,000 8,239,430 (3,167,430) Total Budget Balance & Expenditures $ 47,528,100 $ 49,047,000 $ 50,213,820 $ (1,166,820) Budget Balance - Working Capital $ 8,239,430 Perspective and GAAP (Non-GAAP) Differences: Fair Value of Investment Adjustment (137,619) Deferred Revenues - Non-spendable (141,642) Inventory & Prepaids - Non-spendable (237,664) Unassigned Fund Balance 7,722,505 122

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part D – Required Supplementary Information Police Pension Fund Schedule of Changes in Net Pension Liability, Related Ratios (in Thousands) Fiscal Year Ending June 30, 2018 2017 2016 2015 2014 Total Pension Liability Interest on total pension liability $ 1,197 $ 1,211 $ 1,281 $ 1,311 $ 1,325 Effect of economic/demographic (gains) or losses - - (836) 286 25 Effect of assumption changes or inputs (44) 116 - 932 - Benefit payments (1,541) (1,528) (1,528) (1,557) (1,548) Net change in total pension liability (388) (201) (1,083) 972 (198) Total pension liability, beginning 19,186 19,387 20,471 19,499 19,697 Total pension liability, ending (a) $ 18,798 $ 19,186 $ 19,388 $ 20,471 $ 19,499 Fiduciary Net Position Employer contributions $ 1,295 $ 1,118 $ 1,093 $ 1,386 $ 1,229 Investment income net of investment expenses 908 1,433 279 283 1,583 Benefit payments (1,541) (1,528) (1,528) (1,557) (1,548) Administrative expenses (5) (4) (4) (6) (20) Net change in plan fiduciary net position 657 1,019 (160) 106 1,244 Fiduciary net position, beginning 13,243 12,225 12,385 12,279 11,035 Fiduciary net position, ending (b) $ 13,900 $ 13,244 $ 12,225 $ 12,385 $ 12,279 Net pension liability, ending = (a) - (b) $ 4,898 $ 5,942 $ 7,163 $ 8,086 $ 7,220 Fiduciary net position as a % of total pension liability 73.95% 69.03% 63.05% 60.50% 62.97% This schedule is presented to illustrate the requirement to show information for 10 years. However, recalculations of prior years are not required, and if prior years are not reported in accordance with the current GASB standards, they should not be reported. Police Pension Fund Schedule of Employer Contributions Contribution as Fiscal Year Actuarially Actual Contribution a Percentage of Ended Determined Employer Deficiency Covered Covered June 30 Contribution Contribution (Excess) Payroll Payroll 2018 $ 1,205,092 $ 1,294,750 $ (89,658) $ - N/A 2017 1,176,462 1,118,346 58,116 - N/A 2016 1,212,000 1,093,278 118,722 - N/A 2015 1,176,422 1,385,789 (209,367) - N/A 2014 1,155,110 1,229,363 (74,253) - N/A 2013 1,155,796 1,074,599 81,197 - N/A 2012 979,132 668,274 310,858 - N/A 2011 1,082,956 633,636 449,320 - N/A 2010 786,436 496,587 289,849 - N/A 2009 520,505 725,492 (204,987) - N/A 2008 358,807 721,202 (362,395) - N/A 123

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part D – Required Supplementary Information Police Pension Plan Net Pension Liability June 30, 2018 June 30, 2017 Total pension liability $ 18,797,596 $ 19,185,974 Fiduciary net position 13,900,129 13,243,119 Net pension liability 4,897,467 5,942,855 Fiduciary net position as a % of total pension liability 73.95% 69.03% Covered payroll - - Net pension liability as a % of covered payroll N/A N/A The total pension liability was determined by an actuarial valuation as of July 1, 2016 with liabilities projected to the June 30, 2018 measurement date using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified. Any significant changes during this period have been reflected as prescribed by GASB 67 and 68. Rate of return. For the year ended June 30, 2018, the annual money-weighted rate of return on investments, net of investment expense, was 7.16%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Actuarial Methods and Significant Assumptions Valuation date July 1, 2016 Actuarial cost method Entry Age Method Amortization method Level dollar Amortization period Closed Asset valuation method Fair Market Value Actuarial assumptions: Investment rate of return 6.5% Discount rate 6.5% Projected salary increases none, no remaining active participants Includes inflation at 2.5% Automatic Cost of living (retirees) 2.0% Mortality RP-2014 Blue Collar with fully generational Improvements from 2006 based on assumptions from the 2017 Social Security Admin Trustee’s Report 124

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part D – Required Supplementary Information General Employee Pension Fund Schedule of Changes in Net Pension Liability, Related Ratios (in Thousands) Fiscal Year Ending June 30 2018 2017 2016 2015 2014 Total Pension Liability Service cost $ 406 $ 433 $ 401 $ 459 $ 484 Interest on total pension liability 3,827 3,729 3,719 3,861 3,810 Changes of benefit terms 830 - - - - Effect of economic/demographic (gains) or losses 1,504 41 (267) (422) 111 Effect of assumption changes or inputs (99) 1,200 - 1,956 - Benefit payments (3,976) (3,746) (3,718) (3,700) (3,654) Net change in total pension liability 2,492 1,657 135 2,154 751 Total pension liability, beginning 60,465 58,808 58,673 56,519 55,768 Total pension liability, ending (a) $ 62,957 $ 60,465 $ 58,808 $ 58,673 $ 56,519 Fiduciary Net Position Employer contributions $ 4,777 $ 2,877 $ 3,090 $ 3,420 $ 3,473 Member contributions 195 202 202 209 212 Investment income net of investment expenses 2,757 4,351 850 955 4,153 Benefit payments (3,976) (3,746) (3,718) (3,700) (3,654) Administrative expenses (18) (18) (16) (19) (20) Net change in plan fiduciary net position 3,736 3,666 408 865 4,164 Fiduciary net position, beginning 39,364 35,699 35,291 34,426 30,263 Fiduciary net position, ending (b) $ 43,100 $ 39,365 $ 35,699 $ 35,291 $ 34,427 Net pension liability, ending = (a) - (b) $ 19,857 $ 21,100 $ 23,109 $ 23,382 $ 22,092 Fiduciary net position as a % of total pension liability 68.46% 65.10% 60.70% 60.15% 60.91% Covered payroll $ 5,561 $ 5,636 $ 5,504 $ 5,864 $ 5,971 125

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part D – Required Supplementary Information General Employee Pension Plan Schedule of Employer Contributions Contribution as Fiscal Year Actuarially Actual Contribution a Percentage of Ended Determined Employer Deficiency Covered Covered June 30 Contribution Contribution (Excess) Payroll Payroll 2018 $ 3,016,283 $ 4,777,466 $ (1,761,183) $ 5,561,300 85.91% 2017 2,824,098 2,876,657 (52,559) 5,635,987 51.04% 2016 3,025,982 3,089,409 (63,427) 5,504,387 56.13% 2015 2,983,776 3,419,512 (435,736) 5,864,089 58.31% 2014 2,628,694 3,472,736 (844,042) 5,970,703 58.16% 2013 3,217,964 9,788,571 (6,570,607) 7,076,322 138.33% 2012 3,130,022 3,142,951 (12,929) 7,974,057 39.41% 2011 3,149,493 3,347,728 (198,235) 8,256,751 40.55% 2010 2,564,767 2,270,623 294,144 8,786,981 25.84% 2009 2,356,529 2,491,393 (134,864) 8,716,361 28.58% General Employee Pension Plan Net Pension Liability June 30, 2018 June 30, 2017 Total pension liability $ 62,957,382 $ 60,465,041 Fiduciary net position 43,100,420 39,364,426 Net pension liability 19,856,962 21,100,615 Fiduciary net position as a % of total pension liability 68.46% 65.10% Covered payroll 5,561,300 5,635,987 Net pension liability as a % of covered payroll 357.06% 374.39% The total pension liability was determined by an actuarial valuation as of July 1, 2018 with liabilities projected to the June 30, 2018 measurement date using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified. Any significant changes during this period have been reflected as prescribed by GASB 67 and 68. Rate of return. For the year ended June 30, 2018, the annual money-weighted rate of return on investments, net of investment expense, was 7.12%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. 126

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part D – Required Supplementary Information Actuarial Methods and Significant Assumptions Valuation date July 1, 2018 Actuarial cost method Entry Age Amortization method Level dollar Amortization period Closed; 15-year – Unfunded AAL Asset valuation method Fair Market Value Actuarial Assumptions: Investment rate of return 6.5% Discount rate 6.5% Projected salary increases 3.0% Includes inflation at 2.5% Mortality RP-2014 with fully generational Improvements from 2006 based 2017 SS Admin Trustee’s Report County & Municipal Police and Firefighter's Pension Plan Schedule of the City of Dover's Proportionate Share of the Net Pension Liability Fiscal Year Ending 2017 2016 2015 2014 City's proportion of the net pension liability(asset) 8.6629% 9.0042% 9.6070% 9.6334% City's proportionate share of the net pension liability(asset) $ 873,337 $ 1,431,281 $ (524,958) $ (1,042,117) City's covered payroll $ 6,996,159 $ 7,117,770 $ 7,060,453 $ 6,582,053 City's proportionate share of the net pension liability(asset) as a 12.48% 20.11% (7.44%) (15.83%) percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability 109.23% 105.59% 101.97% 104.47% GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10-year trend is compiled, the City will present information for those years for which information is available. County & Municipal Police and Firefighter's Pension Plan Schedule of City of Dover's Contributions Fiscal Year Ending 2018 2017 2016 2015 2014 Contractually required contribution $ 944,356 $ 951,199 $ 977,587 $ 933,750 $ 990,588 Contributions in relation to the contractually required contribution (944,356) (951,199) (977,587) (933,750) (990,588) Contribution deficiency (excess) $ - $ - $ - $ - $ - City's covered payroll $ 6,843,159 $ 6,996,159 $ 7,117,770 $ 7,060,453 $ 6,582,053 Contributions as a percentage of covered payroll 13.80% 13.60% 13.73% 13.23% 15.05% This schedule is presented to illustrate the requirement to show information for 10 years. However, information prior to June 30, 2014 is not available. 127

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part D – Required Supplementary Information OPEB Trust Fund Schedule of Changes in Net OPEB Liability, Related Ratios Fiscal Year Ending June 30 2018 2017 Total OPEB Liability Service cost $ 1,222 $ 1,655 Interest 4,498 4,682 Effect of economic/demographic (gains) or losses (6,202) (2,871) Effect of assumption changes or inputs - (4,833) Benefit payments (2,704) (2,663) Net change in total OPEB liability (3,186) (4,030) Total OPEB liability, beginning 69,305 73,335 Total OPEB liability, ending (a) $ 66,119 $ 69,305 Fiduciary Net Position Employer contributions $ 5,722 $ 4,603 Investment income net of investment expenses 2,295 3,074 Benefit payments (2,704) (2,663) Administrative expenses (8) (3) Net change in plan fiduciary net position 5,305 5,011 Fiduciary net position, beginning 29,054 24,043 Fiduciary net position, ending (b) $ 34,359 $ 29,054 Net OPEB liability, ending = (a) - (b) $ 31,760 $ 40,251 Fiduciary net position as a % of total OPEB liability 52.00% 41.90% Covered payroll $ 19,578 $ 19,101 Net OPEB liability as a % of covered payroll 162.20% 210.70% This schedule is presented to illustrate the requirement to show information for 10 years. However, recalculations of prior years are not required, and if prior years are not reported in accordance with the current GASB standards, they should not be reported. 128

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part D – Required Supplementary Information OPEB Trust Fund Schedule of City’s Contributions (In Thousands) For the year ended June 30 2018 2017 Actuarially determined contribution (ADC) $ 4,560 $ 4,644 Contributions in relation to the ADC (5,722) (4,603) Contributions deficiency / (excess) $ (1,162) $ 41 Covered payroll $ 19,578 $ 19,101 Contributions as a percentage of covered payroll 29.2 24.1% This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10- year trend is compiled, governments should present information for those years for which information is available. Rate of return. For the year ended June 30, 2018, the annual money-weighted rate of return on investments, net of investment expense, was 7.87%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Actuarial Methods and Significant Assumptions Valuation date June 30, 2018 Actuarial cost method Entry Age Normal Level % of Salary Amortization method Level Dollars Remaining amortization period 30 years Asset valuation method Fair Market Value Actuarial Assumptions: Investment rate of return 6.5% Discount rate 6.5% Inflation 2.5% per year included in payroll growth Healthcare cost trend rates Pre-65 Medical / Rx Initial rate of 9% decreasing by 0.5% annually to an ultimate rate of 4.5% Post-65 Medical / Rx Initial rate of 8% decreasing by 0.5% Annually to an ultimate rate of 4.5% Mortality SOA RPH-2016 Total Dataset Mortality Table fully generational using Scale MP-2016 for all employees 129

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part D – Required Supplementary Information NOTES TO REQUIRED SUPPLEMENTARY INFORMATION GOVERNMENTAL BUDGETS Budgetary Basis of Accounting The City prepares its budget for the General Fund revenue on a modified accrual basis. The expenditures are accounted for when the purchase orders are issued. Encumbrances are established when purchase orders are issued and accounted for as a reservation of fund balance at year-end and are not on a modified accrual basis. The budget is amended in the subsequent year for the outstanding encumbrances of the prior year. The modified accrual basis of accounting is used for the fund financial statements. General Fund actual revenues were higher than the final budget by $1,166,821 with increases in interest earnings, library revenues – general, business licenses, miscellaneous revenues, police extra duty fees, permits and other licenses, property taxes, sanitation fees, garrison farm rent, court of chancery fees, transfer tax, police pension grant, cable grant and transfer from police grant funds. The sources of decreases in revenues was attributed to police fines, Library revenues – county reimbursement, franchise fees, recreation revenue, inter-fund transfer receipts, miscellaneous grants, transfers from municipal street aid and civil traffic penalties. Expenditures were lower than budget by $2,000,608 due to lower than budgeted expense across almost all functions a result of personnel reductions through attrition and retirements. The net result is an increase of $3,167,430 to the General Fund ending fund balance. Budget Amendments During this fiscal year, the City Council amended the budget one time. This budget amendment or supplemental appropriation ordinance was primarily for the following purposes: 1. To re-appropriate budget balances for ongoing capital projects. 2. To amend the grant budgets, reserve accounts for the actual results of the prior fiscal year, and all carried forward budget balances for the major operating funds from the prior fiscal year, as well as program revenues and expenses based on the analyses provided by a mid-year review. 3. To amend significant changes in program revenues, expenses and ending fund balances based on actual amounts. The differences for the year ended June 30, 2018 were as follows: Total revenues- budgetary basis $ 44,141,621 Total expenditures- budgetary basis 41,974,392 Net Increase in fund balance- budgetary basis 2,167,229 Perspective differences Transfer to Reserves 217,182 General Fund Subfund Expense Activity for the Captial Project Fund (2,042,474) Intrafund Transfers to the General Fund- Capital Projects Fund 1,368,700 General Fund Subfund Revenue Activity for the Captial Project Fund 116,239 Fair Value of Investments (66,754) Deferred Revenue Adjustment 87,188 Net increase in fund balance - GAAP Basis $ 1,847,310 130

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware FINANCIAL SECTION PART E SUPPLEMENTARY INFORMATION Combined Fund Schedules Budgetary Schedules 131

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2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information FINANCIAL STATEMENTS GENERAL FUND COMBINING SCHEDULES The General Fund contains a sub-fund for capital projects which is separately budgeted. The combining schedules are presented in the supplementary information. The budgetary comparison for the Governmental Capital Projects Fund has its own separate budget and is presented in this section to show legal compliance. The perspective difference between the basis of budgeting and GAAP is explained in the reconciliation of the basis of budgeting to GAAP. 133

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information The City of Dover, Delaware Combining General Fund Balance Sheet June 30, 2018 General Total General Capital Projects General Fund Fund Funds Assets: Cash and Cash Equivalents $ 2,850,275 $ 178,046 $ 3,028,321 Restricted Cash and Cash Equivalents - - - Investments 6,818,144 3,235,329 10,053,473 Restricted Investments 18,649 - 18,649 Receivables, net Accounts 641,106 - 641,106 Taxes 39,115 - 39,115 Due from Other Funds 617,582 - 617,582 Temporary Advances 5,000 - 5,000 Prepaid Items 127,208 - 127,208 Inventory, at Cost 110,455 - 110,455 Total Assets $ 11,227,534 $ 3,413,375 $ 14,640,909 Liabilities: Accounts Payable $ 1,994,034 $ 134,478 $ 2,128,512 Deferred Revenue 96,639 57,825 154,464 Due to Other Funds 4,907 - 4,907 Other 242,494 - 242,494 Total Liabilities 2,338,074 192,303 2,530,377 Deferred Inflows of Resources: Unavailable revenue 141,642 - 141,642 Total Deferred Inflows of Resources 141,642 - 141,642 Fund Balances: Non-Spendable Inventory and Prepaids 237,664 - 237,664 Library Endowment 5,000 - 5,000 Patronage Stock 16,594 - 16,594 Restricted Library Endowment 2,055 - 2,055 Verizon Cable Franchise 8,517 - 8,517 Committed Contingency 755,483 - 755,483 Parkland Reserve - 355,699 355,699 Assigned Capital Projects - 2,865,373 2,865,373 Unassigned 7,722,505 - 7,722,505 Total Fund Balances 8,747,818 3,221,072 11,968,890 Total Liabilities and Fund Balances $ 11,227,534 $ 3,413,375 $ 14,640,909 134

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information The City of Dover, Delaware Combining Statement of Revenues, Expenditures and Changes in Fund Balances of the General Fund (Non-GAAP Basis) For the Year Ended June 30, 2018 General Total General Capital Projects General Fund Fund Funds Revenues Fines $ 613,090 $ - $ 613,090 Library Revenue- General 117,178 - 117,178 Library Revenue County Reimbursement 274,930 - 274,930 Licenses and Permits 3,728,517 - 3,728,517 Sanitation Fees and Rebates 3,133,360 - 3,133,360 Miscellaneous Services 1,493,288 145,393 1,638,681 Property Taxes 13,065,098 - 13,065,098 Grants Received 584,822 - 584,822 Court of Chancery Fees 1,496,520 - 1,496,520 Investment Income 182,969 19,332 202,301 Total Revenues 24,689,772 164,725 24,854,497 Expenditures Current: General Government 1,553,912 156,188 1,710,100 Library Services 1,680,176 - 1,680,176 Public Safety and Law Enforcement 20,284,967 458,936 20,743,903 Public Works 1,652,543 28,993 1,681,536 Recreational Services 748,020 73,593 821,613 Streets and Sanitation Services 3,368,785 1,268,360 4,637,145 Engineering services 263,930 - 263,930 Financial Administration 706,454 56,404 762,858 Garage and Stores 499,289 - 499,289 Insurance 302,258 - 302,258 Retiree Health Care 2,063,000 - 2,063,000 Employee Pension 619,000 - 619,000 Community and Economic Development 150,000 - 150,000 Street Lights 803,924 - 803,924 Debt Service: Principal Retirement 332,355 - 332,355 Interest and Fiscal Charges 128,455 - 128,455 Total Expenditures 35,157,068 2,042,474 37,199,542 Excess (deficiency) of Revenues over Expenditures (10,467,296) (1,877,749) (12,345,045) Other Financing Sources and Uses Reserve Transfers (217,180) 287,089 69,909 Interfund Transfers 12,851,705 1,368,700 14,220,405 Total other Financing Sources and Uses 12,634,525 1,655,789 14,290,314 Net Change in Fund Balances 2,167,229 (221,960) 1,945,269 Fund Balances at Beginning of Year 6,072,201 1,637,161 7,709,362 Fund Balances at End of Year $ 8,239,430 $ 1,415,201 $ 9,654,631 Perspective and GAAP (Non-GAAP) Differences: Fair Value of Investment Adjustment $ (137,619) $ (65,282) $ (202,901) Deferred Revenues - Non-spendable (141,642) - (141,642) Inventory & Prepaids - Non-spendable (237,664) - (237,664) Capital Asset - Assigned - (1,349,919) (1,349,919) Unassigned Fund Balance $ 7,722,505 $ - $ 7,722,505 135

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information CITY OF DOVER, DELAWARE GOVERNMENTAL CAPITAL PROJECTS FUND Schedule of Revenues, Expenditures and Changes in Fund Balances Budget & Actual (Non-GAAP Basis) For the Year Ended June 30, 2018 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) Beginning Balance - Working Capital $ 412,900 $ 1,637,200 $ 1,637,161 $ (39) REVENUES: State Grant - Other 33,000 63,000 - (63,000) Transfer from General Fund for Projects 1,368,700 1,368,700 1,368,700 - Transfer from Parkland Reserve 205,000 235,800 19,235 (216,565) Transfer from Capital Asset Reserve 418,300 418,300 300,702 (117,598) Income from Sale of Assets - - 82,983 82,983 Interest Earnings 8,300 8,300 19,331 11,031 Miscellaneous Receipts - - 62,410 62,410 Total Revenues 2,033,300 2,094,100 1,853,361 (240,739) TOTAL BEGINNING BALANCE & REVENUES $ 2,446,200 $ 3,731,300 $ 3,490,522 $ (240,778) EXPENDITURES: City Clerk $ - $ 156,200 $ 156,188 $ 12 Fire 145,700 145,700 145,614 86 Grounds Maintenance 62,500 62,500 - 62,500 Police 379,900 379,900 313,322 66,578 Recreation 271,000 331,800 73,593 258,207 Sanitation - 40,000 39,994 6 Streets 1,070,000 1,949,900 1,228,366 721,534 Information Technology 36,600 63,600 56,404 7,196 Facilities Management 25,100 54,200 28,993 25,207 Subtotal 1,990,800 3,183,800 2,042,474 1,141,326 Transfer to Parkland Reserve - 25,800 32,848 (7,048) Total Expenditures 1,990,800 3,209,600 2,075,322 1,134,278 Budget Balance - Working Capital 455,400 521,700 1,415,201 (893,501) Budget Balance & Expenditures $ 2,446,200 $ 3,731,300 $ 3,490,523 $ 240,777 Budget Balance - Working Capital $ 1,415,201 Perspective and GAAP (Non-GAAP) Differences: Fair value of investment adjustment (65,282) Assigned to Capital assets 1,515,454 Committed to Parks & Recreation improvements 355,699 Total Fund Balances $ 3,221,072 136

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information FINANCIAL STATEMENTS SPECIAL REVENUE FUNDS Special Revenue Funds include the group of funds classified as grant funds and a Realty Transfer Tax Fund. The proceeds from specific revenue sources are restricted to specified expenditure purposes. The City adopts budgets for selected Special Revenue Funds. Combining and individual statements appear in this section. POLICE GRANTS The City of Dover Police Department receives various grants from the State of Delaware for public and highway safety and the U.S. Department of Justice for local law enforcement. All grant transactions are recorded in this fund. LIBRARY GRANTS The City of Dover Public Library receives various grants from the State of Delaware, Kent County, and the Federal Government. Activities associated with these grants are recorded in this fund. MUNICIPAL STREET AID The State of Delaware has passed legislation to share a portion of Delaware’s motor fuel tax revenue with local municipalities through grants. The amount of the grant the City receives depends on its population and miles of streets maintained. The grant is used for street light expense within the City. CDBG HOUSING GRANTS & NEIGHBORHOOD STABILIZATION PROGRAM The City receives a U.S. Department of Housing and Urban Development Entitlement Grant for the Community Development Block Grant Program. This is to provide decent housing, a suitable living environment and expand economic opportunities primarily for people of low and moderate incomes. Combined with the CDBG Fund is the Neighborhood Stabilization Program (NSP) that provides assistance in the redevelopment of residential properties that have been abandoned and foreclosed upon to stabilize residential communities. 137

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information FINANCIAL STATEMENTS SPECIAL REVENUE FUNDS (continued) STATE OF DELAWARE DEPARTMENT OF TRANSPORTATION GRANTS The State of Delaware Department of Transportation grants provide funds for specific street projects in the City. State law provides funds to the State’s elected officials for suburban street aid, which officials can then provide to their respective districts. The City receives these funds for designated street projects and records all transactions for this fund. SUBSTANCE ABUSE PREVENTION GRANT The State of Delaware General Assembly Grant-In-Aid Program provides funds to implement a substance abuse prevention program for at-risk and/or disadvantaged youths in the City of Dover. ELECTRONIC RED-LIGHT SAFETY PROGRAM (ERLSP) The State of Delaware Department of Transportation provides a grant to municipalities that implement the Electronic Red- L i g h t Safety Program. Under this program, the City is granted a portion of the fines collected from drivers who are ticketed for running red lights installed with electronic photo identification equipment within the City limits. REALTY TRANSFER TAX Delaware Code states that realty transfer tax realized by the City shall be segregated from the general fund and the funds shall be expended solely for the capital and operating costs of public safety services, economic development programs, public works services, capital projects and improvements, infrastructure projects and improvements and debt reduction. 138

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information CITY OF DOVER, DELAWARE SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET JUNE 30, 2018 MUNICIPAL CDBG/NSP STATE SUBSTANCE REALTY POLICE LIBRARY STREET HOUSING D.O.T. ABUSE ERLSP TRANSFER GRANTS GRANTS AID GRANTS GRANTS PREV. GRANT TAX TOTALS ASSETS: Cash $ 229,163 $ 13,385 $ 106 $ 2,712 $ 49,857 $ 101,117 $ 100 $ 4,992 $ 401,432 Receivables - - - - 643,699 - - - 643,699 Due from other funds-charges 375 - - - - - - - 375 Prepaid items - 1,152 - - - 8,838 - - 9,990 Due from other governments 4,601 - - 67,832 - - 43,927 - 116,360 TOTAL ASSETS $ 234,139 $ 14,537 $ 106 $ 70,544 $ 693,556 $ 109,955 $ 44,027 $ 4,992 $ 1,171,856 LIABILITIES AND FUND BALANCE: Liabilities: Vouchers Payable $ 12,676 $ 13,575 $ - $ 60,075 $ 31,204 $ 16,284 $ - $ - $ 133,814 Deferred Revenue 2,166 - - - - - - - 2,166 Due to other funds-charges 17,976 - 6 3,456 - - 43,927 4,992 70,357 Due to other funds-temporary advances - - - 5,000 - - - - 5,000 Total Liabilities 32,818 13,575 6 68,531 31,204 16,284 43,927 4,992 211,337 Fund Balances: Nonspendable - 1,152 - - - 8,838 - - 9,990 Restricted 201,321 (190) 100 2,013 662,352 84,833 100 - 950,529 Total Fund Balances 201,321 962 100 2,013 662,352 93,671 100 - 960,519 TOTAL LIABILITIES AND FUND BALANCES $ 234,139 $ 14,537 $ 106 $ 70,544 $ 693,556 $ 109,955 $ 44,027 $ 4,992 $ 1,171,856 139

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information CITY OF DOVER SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN UNRESERVED FUND BALANCES YEAR ENDED JUNE 30, 2018 MUNICIPAL CDBG/NSP STATE SUBSTANCE REALTY POLICE LIBRARY STREET HOUSING D.O.T. ABUSE PREV. ERLSP TRANSFER GRANTS GRANTS AID GRANTS GRANTS GRANT TAX TOTALS REVENUES: Grants received $ 473,912 $ 283,081 $ 665,325 $ 259,082 $ 246,061 $ 22,424 $ - $ - $ 1,949,885 Recreation revenue - - - - - 87,125 - - 87,125 Police fines - - - - - - 508,045 - 508,045 Transfer taxes - - - - - - - 2,022,165 2,022,165 Miscellaneous revenue - - - - 580,827 - - - 580,827 Investment income (loss) 3,468 - 754 - 1,488 - - 978 6,688 TOTAL REVENUES 477,380 283,081 666,079 259,082 828,376 109,549 508,045 2,023,143 5,154,735 EXPENDITURES: Program expenditures 274,478 301,025 - 260,539 236,937 103,318 - - 1,176,297 TOTAL EXPENDITURES 274,478 301,025 - 260,539 236,937 103,318 - - 1,176,297 Excess (deficiency) of revenues over (under) expenditures 202,902 (17,944) 666,079 (1,457) 591,439 6,231 508,045 2,023,143 3,978,438 OTHER FINANCING SOURCES (USES): Transfers-out (123,140) - (666,079) - - - (508,045) (2,023,143) (3,320,407) Net Change in fund balances 79,762 (17,944) - (1,457) 591,439 6,231 - - 658,031 FUND BALANCE AT BEGINNING OF YEAR 121,559 18,906 100 3,470 70,913 87,440 100 - 302,488 FUND BALANCE AT END OF YEAR $ 201,321 $ 962 $ 100 $ 2,013 $ 662,352 $ 93,671 $ 100 $ - $ 960,519 140

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information CITY OF DOVER, DELAWARE POLICE GRANTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN UNRESERVED FUND BALANCE - BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2018 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES: Beginning balance $ 72,400 $ 121,600 $ 121,559 $ (41) Interest earned - - 3,468 3,468 Grants received 358,000 671,900 473,912 (197,988) TOTAL REVENUES & BEGINNING BALANCE 430,400 793,500 598,939 (194,561) EXPENDITURES: Personnel 13,500 13,500 13,372 (128) Program expenses/supplies 312,000 365,900 217,560 (148,340) Telephone/fax 20,000 20,000 18,603 (1,397) Training/Conference/Food/Travel 15,000 25,000 15,500 (9,500) Consulting/audit fees 1,000 1,000 - (1,000) Contractual services - 210,000 9,443 (200,557) TOTAL EXPENDITURES 361,500 635,400 274,478 (360,922) Other financing uses: Operating transfers - out (60,000) (100,000) (123,140) (23,140) BALANCE CARRIED TO NEXT YEAR $ 8,900 $ 58,100 $ 201,321 $ 143,221 141

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information CITY OF DOVER, DELAWARE LIBRARY GRANTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN UNRESERVED FUND BALANCE - BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2018 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES: Beginning balance $ - $ 18,900 $ 18,906 $ 6 Grants received: State 281,700 280,800 281,271 471 Grants received: Federal 2,500 1,800 1,810 10 TOTAL REVENUES & BEGINNING BALANCE 284,200 301,500 301,987 487 EXPENDITURES: Program expenditures/supplies (Fed Grant) 2,500 2,700 1,600 (1,100) Program expenditures/supplies (State Grant) 23,500 25,500 30,897 5,397 Office Supplies 30,000 28,000 27,154 (846) Printing/duplicating 13,000 13,700 12,151 (1,549) Postage 100 200 98 (102) Books 126,400 128,800 130,384 1,584 Furniture/Fixtures 1,500 5,500 7,001 1,501 Audio visual supplies 74,700 79,000 77,667 (1,333) Training/conference/food/travel 2,500 4,200 5,200 1,000 Office equipment repairs 4,900 4,000 888 (3,112) Office equipment lease 2,000 2,100 2,002 (98) Computer software 2,100 2,500 1,888 (612) Computer hardware 1,000 5,300 4,095 (1,205) TOTAL EXPENDITURES 284,200 301,500 301,025 (475) BALANCE CARRIED TO NEXT YEAR $ - $ - $ 962 $ 962 142

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information CITY OF DOVER, DELAWARE MUNICIPAL STREET AID FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN UNRESERVED FUND BALANCE-BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2018 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES: Beginning balance $ 100 $ 100 $ 100 $ - State Grant - Operations 673,100 673,100 665,325 (7,775) Interest Earned - - 754 754 TOTAL REVENUES & BEGINNING BALANCE 673,200 673,200 666,179 (7,021) Other financing uses: Operating transfers-out (673,100) (673,100) (666,079) 7,021 BALANCE CARRIED TO NEXT YEAR $ 100 $ 100 $ 100 $ - 143

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information CITY OF DOVER, DELAWARE HOUSING PROGRAMS - CDBG & NSP SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN UNRESERVED FUND BALANCE-BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2018 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES: Beginning balance CDBG $ 2,100 $ 2,100 $ 2,013 $ (87) Beginning balance NSP - - 6,304 6,304 Federal grant received 216,700 332,700 198,890 (133,810) Revenue from NSP - - 55,345 55,345 TOTAL REVENUES & BEGINNING BALANCE 218,800 334,800 262,552 (72,248) EXPENDITURES: Prior year closing cost/down payment program - 11,800 11,793 7 Prior year MHDC home repair - 15,000 14,917 83 Prior year Milford housing H/O rehab - 35,900 17,942 17,958 Prior year Connection Community Supply - 6,800 5,781 1,019 Prior year administrative expense - 18,800 17,861 939 Current year closing cost/down payment program 60,000 84,000 82,207 1,793 Current year Connection Community Suppt 3,000 3,000 - 3,000 Current year Dover interfaith ministry 24,000 24,000 22,646 1,354 Current year MHDC home repair 25,000 26,000 18,319 7,681 Current year Habitat for Humanity 21,300 21,300 - 21,300 Current year Milford housing H/O rehab 40,000 40,000 - 40,000 Current year administrative expense 43,400 46,100 7,424 38,676 NSP salaries - - 3,649 (3,649) NSP expense - - 58,000 (58,000) TOTAL EXPENDITURES 216,700 332,700 260,539 72,161 CDBG BALANCE CARRIED TO NEXT YEAR $ 2,100 $ 2,100 $ 2,013 $ 87 NSP BALANCE CARRIED TO NEXT YEAR $ - $ - $ - $ - 144

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information CITY OF DOVER, DELAWARE STATE OF DELAWARE DEPARTMENT OF TRANSPORTATION GRANTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN UNRESERVED FUND BALANCE - BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2018 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES: Beginning balance $ 85,200 $ 70,900 $ 70,913 $ 13 Grants received: State 500,000 500,000 246,061 (253,939) Miscellaneous Revenues - - 580,827 580,827 Interest earned - - 1,488 1,488 TOTAL REVENUES & BEGINNING BALANCE 585,200 570,900 899,289 328,389 EXPENDITURES: Program expenditures grant related 500,000 500,000 236,937 (263,063) TOTAL EXPENDITURES 500,000 500,000 236,937 263,063 BALANCE CARRIED TO NEXT YEAR $ 85,200 $ 70,900 $ 662,352 $ 591,452 CITY OF DOVER, DELAWARE SUBSTANCE ABUSE PREVENTION PROGRAM SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN UNRESERVED FUND BALANCE - BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2018 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES: Beginning balance $ 45,300 $ 45,300 $ 87,440 $ 42,140 Grants revenue 28,000 28,000 22,424 (5,576) Recreation revenue 33,000 33,000 87,125 54,125 TOTAL REVENUES & BEGINNING BALANCE 106,300 106,300 196,989 90,689 EXPENDITURES: Temporary help/benefits 67,700 67,700 65,137 (2,563) Program expenditures/supplies 35,000 35,000 38,181 3,181 TOTAL EXPENDITURES 102,700 102,700 103,318 618 BALANCE CARRIED TO NEXT YEAR $ 3,600 $ 3,600 $ 93,671 $ 90,071 145

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information FINANCIAL SCHEDULES PROPRIETARY FUND TYPES ENTERPRISE FUNDS The following schedules pertaining to the major enterprise funds are not required under GAAP, but are included for public review of budgetary compliance. Accordingly, no reconciliation to the GAAP financial statements is provided. WATER/WASTEWATER FUND The Water/Wastewater Fund accounts for all operating activity of the Water/Wastewater Utility. This includes service revenues, investment earnings on operating accounts, direct and indirect operating expenses, sewerage treatment fees, debt service, and transfers to other funds and the Improvement and Extension Fund. The Water/Wastewater Improvement and Extension Fund is used to account for all capital project and equipment purchases. The City utilizes revenue and expenditure accounts to record capital project receipts, transfers from the operating fund, and project costs. The funds are combined for GAAP reporting purposes with assets capitalized. ELECTRIC REVENUE FUND The Electric Revenue Fund accounts for all operating activity of the electric utility. This includes service revenues, investment earnings on operating accounts, direct and indirect operating expenses, purchased power cost, debt service, and transfers to other funds and the Improvement and Extension Fund. The Electric Improvement and Extension Fund is used to account for all capital project and equipment purchases. The City utilizes revenue and expenditure accounts to record capital project receipts, transfers from the operating fund, and project costs. The funds are combined for GAAP reporting purposes with assets capitalized. 146

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information CITY OF DOVER, DELAWARE WATER/WASTEWATER FUND SCHEDULE OF REVENUES AND EXPENSES BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2018 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) Beginning Balance - Water $ 1,330,900 $ 1,680,500 $ 1,680,473 $ (27) Beginning Balance - Wastewater 1,166,800 1,399,700 1,399,659 (41) TOTAL BEGINNING BALANCES 2,497,700 3,080,200 3,080,132 (68) REVENUES: Water fees 5,914,600 5,914,600 5,584,474 (330,126) Wastewater fees 3,768,000 3,768,000 3,612,194 (155,806) Wastewater Treatment Fees 2,952,900 2,952,900 2,813,867 (139,033) Groundwater adjustment 1,899,700 1,899,700 1,800,156 (99,544) Miscellaneous services 61,000 61,000 45,745 (15,255) Water tank space rent 391,400 391,400 390,643 (757) Interest earnings 11,400 11,400 38,525 27,125 Sewer Impact Fees 209,000 209,000 962,684 753,684 Water Impact Fees 231,000 231,000 1,069,673 838,673 Total Revenues 15,439,000 15,439,000 16,317,961 878,961 TOTAL BEGINNING BALANCES & REVENUES $ 17,936,700 $ 18,519,200 $ 19,398,093 $ 878,893 EXPENSES: Engineering & Inspection $ 517,800 $ 523,300 $ 422,740 $ 100,560 Water 635,700 660,300 537,553 122,747 Water Treatment Plant 1,780,500 1,791,100 1,743,610 47,490 Wastewater 962,800 991,000 979,610 11,390 Kent County Treatment Fee 3,926,500 3,926,500 3,985,933 (59,433) Interfund Service Fees 1,716,100 1,716,100 1,672,856 43,244 Retirees Health Care 242,200 242,200 242,200 - Debt Service - Water 524,600 524,600 524,593 7 Debt Service - Wastewater 612,800 612,800 612,842 (42) Other Employment Expenses 25,900 4,000 - 4,000 Bank & CC Fees 26,000 26,000 28,206 (2,206) Bond Issuance Cost 40,000 40,000 - 40,000 Other Appropriations: Approp to Pension Fund 7,500 152,300 152,300 - Transfer to Water I/E 1,600,000 1,576,500 1,576,500 - Transfer to Wastewater I/E 1,600,000 1,576,500 1,576,500 - Transfer to Impact Fee Reserve - Water - - 706,720 (706,720) Transfer to Impact Fee Reserve - Wastewater - - 770,094 (770,094) Transfer to General Fund from Water 500,000 500,000 500,000 - Transfer to General Fund from Wastewater 400,000 400,000 400,000 - Total Expenses 15,118,400 15,263,200 16,432,257 (1,169,057) Budget Balance - Water 1,575,600 1,849,400 1,912,846 (63,446) Budget Balance - Wastewater 1,242,700 1,406,600 1,052,990 353,610 Total Budget Balances - Working Capital 2,818,300 3,256,000 2,965,836 290,164 TOTAL BUDGET BALANCES & EXPENSES $ 17,936,700 $ 18,519,200 $ 19,398,093 $ (878,893) 147

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information CITY OF DOVER, DELAWARE WATER/WASTEWATER IMPROVEMENT & EXTENSION FUND SCHEDULE OF REVENUES AND EXPENSES BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2018 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) Beginning Balance -Water $ 2,042,000 $ 4,836,100 $ 4,836,082 $ (18) Beginning Balance -Wastewater 1,195,100 1,008,500 1,008,471 (29) TOTAL BEGINNING BALANCES 3,237,100 5,844,600 5,844,553 (47) REVENUES: Miscellaneous Receipts - 32,400 32,350 (50) Interest earnings 100,800 100,800 109,193 8,393 Investment Management Fees (7,600) (7,600) (6,867) 733 Income from sale of assets - - 7,408 7,408 Transfer from Water WW for Water 1,600,000 1,576,500 1,576,500 - Transfer from Water WW for Wastewater 1,600,000 1,576,500 1,576,500 - Total Revenues 3,293,200 3,278,600 3,295,084 16,484 TOTAL BEGINNING BALANCES & REVENUES $ 6,530,300 $ 9,123,200 $ 9,139,637 $ 16,437 EXPENSES: Water $ 1,608,400 $ 1,652,000 $ 795,947 $ 856,053 Wastewater 1,543,000 2,624,300 1,507,198 1,117,102 Water Treatment Plant - 2,483,400 15,113 2,468,287 Total Expenses 3,151,400 6,759,700 2,318,258 4,441,442 Budget Balance - Water 2,080,200 2,340,000 5,672,564 (3,332,564) Budget Balance - Wastewater 1,298,700 23,500 1,148,815 (1,125,315) Total Budget Balances - Working Capital 3,378,900 2,363,500 6,821,379 (4,457,879) TOTAL BUDGET BALANCES & EXPENSES $ 6,530,300 $ 9,123,200 $ 9,139,637 $ (16,437) 0 0 0 0 148

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information CITY OF DOVER, DELAWARE ELECTRIC REVENUE FUND SCHEDULE OF REVENUES AND EXPENSES BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2018 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) Beginning Balance - Working Capital $ 20,290,200 $ 22,252,500 $ 22,252,513 $ 13 REVENUES: Direct base sales 79,656,000 79,656,000 81,494,356 1,838,356 Distribution of Earnings - PCA Credit (6,176,700) (6,176,700) (6,337,115) (160,415) Rental income 104,500 104,500 132,419 27,919 Miscellaneous services 531,200 531,200 514,230 (16,970) Utility tax 1,236,200 1,236,200 1,255,094 18,894 Green Energy 130,000 130,000 133,301 3,301 Interest earned - operating 216,300 216,300 218,664 2,364 Total Revenues 75,697,500 75,697,500 77,410,949 1,713,449 TOTAL BEGINNING BALANCE & REVENUES $ 95,987,700 $ 97,950,000 $ 99,663,462 $ 1,713,462 EXPENSES: Power Supply & Generation Hedged Energy $ 22,807,900 $ 22,557,900 $ 19,701,668 $ 2,856,232 Power Supply Management 835,000 835,000 834,996 4 Capacity Charges 10,482,500 10,482,500 10,649,519 (167,019) Dover Sun Park Energy 2,661,300 2,661,300 2,423,597 237,703 Solar Renewal Energy Credits 371,200 371,200 385,119 (13,919) Renewable Energy Credits 578,300 578,300 392,928 185,372 RGGI 64,000 64,000 - 64,000 PJM Charges - Energy 6,024,400 6,024,400 8,362,584 (2,338,184) PJM Charges - Transmission & Fees 6,900,200 6,900,200 6,799,982 100,218 Total Power Supply 50,724,800 50,474,800 49,550,393 924,407 Plant Operations 6,146,500 6,146,500 5,612,090 534,410 Generation Fuels 817,400 817,400 1,877,977 (1,060,577) Capacity Credits (7,120,100) (7,120,100) (7,110,514) (9,586) PJM Spot Market Energy (958,100) (958,100) (2,509,822) 1,551,722 PJM Credits (535,400) (535,400) (491,496) (43,904) Total Generation (1,649,700) (1,649,700) (2,621,765) 972,065 Utility Tax 1,236,200 1,236,200 1,255,094 (18,894) Administration 797,000 775,000 514,959 260,041 Transmission/Distribution 3,599,600 3,690,300 3,406,665 283,635 Electrical Engineering 1,226,400 1,249,900 1,090,938 158,962 Systems Operations 644,700 656,700 671,848 (15,148) Meter Reading 392,500 393,500 392,969 531 Contractual Services - Power Supply 100,000 250,000 189,181 60,819 Legal Expenses 25,000 125,000 55,633 69,367 Provision for Uncollectible 250,000 250,000 250,000 - Retirees Health Care 820,300 820,300 820,300 - OPEB Trust Contribution 1,000,000 1,000,000 1,000,000 - Pension Trust Contribution 1,000,000 1,234,500 1,234,500 - Green Energy Payment to DEMEC 130,000 130,000 133,301 (3,301) Bank & CC Fees 295,000 295,000 324,282 (29,282) Interest on Deposits 21,000 21,000 17,068 3,932 Intrafund Service Fees 3,660,100 3,660,100 3,539,575 120,525 Other Appropriations: Electric Capital Project Fund 5,000,000 5,000,000 5,000,000 - General Fund 10,000,000 10,000,000 10,000,000 - Debt Service 1,605,500 1,605,500 1,613,204 (7,704) Rate Stabilization Fund 5,200,000 5,200,000 5,200,000 - Other Employment Expenses 105,200 - - - TOTAL EXPENSES 86,183,600 86,418,100 83,638,145 2,779,955 Budget Balance - Working Capital 9,804,100 11,531,900 16,025,317 (4,493,417) TOTAL BUDGET BALANCE & EXPENSES $ 95,987,700 $ 97,950,000 $ 99,663,462 $ (1,713,462) 149

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information CITY OF DOVER, DELAWARE ELECTRIC IMPROVEMENT AND EXTENSION FUND SCHEDULE OF REVENUES AND EXPENSES BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2018 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) Beginning Balance - Working Capital $ 6,600,300 $ 10,365,700 $ 10,365,652 $ (48) TOTAL BEGINNING BALANCES 6,600,300 10,365,700 10,365,652 (48) REVENUES: Transfer from Electric Revenue Fund 5,000,000 5,000,000 5,000,000 - Interest Earnings 109,800 109,800 135,117 25,317 Income from Sale of Assets - - 2,365 2,365 General Service Billing 370,000 370,000 351,993 (18,007) Total Revenues 5,479,800 5,479,800 5,489,475 9,675 TOTAL BEGINNING BALANCES & REVENUES $ 12,080,100 $ 15,845,500 $ 15,855,127 $ 9,627 EXPENSES: Power Plant $ 2,328,000 $ 2,816,600 $ 2,150,352 $ 666,248 Transmission/Distribution 1,725,500 1,597,800 956,760 641,040 Engineering 1,315,000 1,612,800 655,508 957,292 Meter Reading - 36,000 35,986 14 Administration 8,500 8,500 - 8,500 ERP System 1,500,000 2,441,700 932,631 1,509,069 Total Expenses 6,877,000 8,513,400 4,731,238 3,782,162 Budget Balance - Improvement & Extension Fund 5,203,100 7,332,100 11,123,889 (3,791,789) Total Budget Balances - Working Capital 5,203,100 7,332,100 11,123,889 (3,791,789) TOTAL BUDGET BALANCES & EXPENSES $ 12,080,100 $ 15,845,500 $ 15,855,127 $ (9,627) 150

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information FINANCIAL SCHEDULES PROPRIETARY FUND TYPES INTERNAL SERVICE FUNDS WORKERS’ COMPENSATION INSURANCE FUND The City has created this fund to account for the revenues and expenses related to a self- insured Workers’ Compensation Fund. The revenues are received from the City's various funds. These funds contribute to the Workers’ Compensation Fund an amount based on salaries at a pre-determined assessment rate. Claims paid, reinsurance cost and third- party administrator's fees are charged to this fund. Budgetary schedule is included for public review of budgetary compliance. 151

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information CITY OF DOVER, DELAWARE INTERNAL SERVICE FUND - WORKERS' COMPENSATION SCHEDULE OF REVENUES AND EXPENSES BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2018 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) OPERATING REVENUES: Beginning Balance $ 1,487,800 $ 1,257,700 $ 1,259,284 $ 1,584 Interest Earned 22,500 22,500 28,000 5,500 City Contribution 904,300 904,300 782,228 (122,072) Miscellaneous Revenue - - 47,877 47,877 TOTAL REVENUES $ 2,414,600 $ 2,184,500 $ 2,117,389 $ (67,111) OPERATING EXPENSES: Program Expenses $ 565,000 $ 565,000 $ 396,169 $ 168,831 Contractual Services 25,000 25,000 15,829 9,171 Insurance 110,800 110,800 121,636 (10,836) State of Delaware - Self-Insurance Tax 39,000 39,000 40,949 (1,949) TOTAL EXPENSES $ 739,800 $ 739,800 $ 574,583 $ 165,217 BUDGET BALANCE - CARRY FORWARD $ 1,674,800 $ 1,444,700 $ 1,542,806 $ (98,106) 152

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information FINANCIAL STATEMENTS FIDUCIARY FUND TYPES AGENCIES DOWNTOWN DOVER PARTNERSHIP The City established the Downtown Dover Partnership as an agency for the development of the downtown urban area. FOURTH OF JULY CELEBRATION COMMITTEE The Fourth of July Celebration Committee is designed to provide recreation enjoyment and educational events commemorating the birth of our nation. 153

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Part E – Supplementary Information CITY OF DOVER, DELAWARE COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS YEAR ENDED JUNE 30, 2018 BALANCE BALANCE JUNE 30, 2017 ADDITIONS DEDUCTIONS JUNE 30, 2018 DOWNTOWN DOVER PARTNERSHIP ASSETS: Cash $ 698,410 $ 509,455 $ 535,324 $ 672,541 Receivables 3,579 53,195 3,856 52,918 Prepaid Items 987 342 987 342 Total Assets $ 702,976 $ 562,992 $ 540,167 $ 725,801 LIABILITIES: Vouchers Payable 19,676 $ 297,653 $ 237,414 $ 79,915 Deposit Payable 27,432 - - 27,432 Due to Agencies 655,868 - 37,414 618,454 Total Liabilities $ 702,976 $ 297,653 $ 274,828 $ 725,801 4TH OF JULY CELEBRATION COMMITTEE ASSETS: Cash $ 34,811 $ 21,935 $ 25,226 $ 31,520 Prepaid items 2,201 9,500 2,201 9,500 Total Assets $ 37,012 $ 31,435 $ 27,427 $ 41,020 LIABILITIES: Vouchers Payable $ - $ 2,200 $ 2,200 Due to Agencies 37,012 21,935 20,127 38,820 Total Liabilities $ 37,012 $ 24,135 $ 20,127 $ 41,020 TOTAL-ALL AGENCY FUNDS ASSETS: Cash & Investments $ 739,730 $ 531,390 $ 560,550 $ 704,061 Receivables 3,579 53,195 3,856 52,918 Prepaid Items 4,889 9,842 3,188 9,842 Total Assets $ 748,198 $ 594,427 $ 567,594 $ 766,821 LIABILITIES: Vouchers Payable $ 19,676 $ 299,853 $ 237,414 $ 82,115 Deposit Payable 27,432 - - 27,432 Due to Agencies 701,090 21,935 57,541 657,274 Total Liabilities $ 748,198 $ 321,788 $ 294,955 $ 766,821 154

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware STATISTICAL SECTION This section of the City of Dover’s Comprehensive Annual Financial Report represents detailed information as a context for understanding what the statements, note disclosures and required supplementary information says about the Government’s overall financial health. 155

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2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section STATISTICAL SECTION This part of the City of Dover’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government’s overall financial health. FINANCIAL TRENDS These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. REVENUE CAPACITY These schedules contain information to help the reader assess the City’s most significant local revenue source, property tax. DEBT CAPACITY These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. DEMOGRAPHIC AND ECONOMIC INFORMATION These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. OPERATING INFORMATION These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 157

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 1 City of Dover, Delaware Net Position by Component Last Ten Fiscal Years (Accrual basis of accounting) Fiscal Year 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Governmental Activities Net investment in capital assets $ 53,239,906 $ 54,350,984 $ 54,325,174 $ 51,485,408 $ 50,738,483 $ 49,577,021 $ 49,642,124 $ 38,839,995 $ 35,742,504 $ 35,752,624 Restricted 961,101 306,474 932,728 556,553 612,054 721,682 482,780 1,774,167 1,250,342 1,758,470 Unrestricted (36,772,282) (44,105,399) (22,214,284) (27,947,709) (7,142,570) (4,791,553) (6,759,433) (99,435) 4,820,682 9,536,614 Total governmental activities net position 17,428,725 10,552,059 33,043,618 24,094,252 44,207,967 45,507,150 43,365,471 40,514,727 41,813,528 47,047,708 Business-type activities Net investment in capital assets 111,894,357 110,779,002 110,647,045 108,565,514 101,670,949 100,079,972 98,303,263 97,270,906 96,660,480 91,471,776 Restricted 46,693,086 44,176,110 37,026,527 36,751,850 36,123,755 34,665,736 33,836,315 34,148,330 31,302,487 34,372,050 Unrestricted 22,683,806 21,086,446 26,876,166 21,732,221 36,098,998 39,534,763 33,947,753 23,286,232 19,318,633 18,614,907 Total business-type activities net position 181,271,249 176,041,558 174,549,738 167,049,585 173,893,702 174,280,471 166,087,331 154,705,468 147,281,600 144,458,733 Primary government Net investment in capital assets 165,134,263 165,129,986 164,972,219 160,050,922 152,409,432 149,656,993 147,945,387 136,110,901 132,402,984 127,224,400 Restricted 47,654,187 44,482,584 37,959,255 37,308,403 36,735,809 35,387,418 34,319,095 35,922,497 32,552,829 36,130,520 Unrestricted (14,088,476) (23,018,953) 4,661,882 (6,215,488) 28,956,428 34,743,210 27,188,320 23,186,797 24,139,315 28,151,521 Total primary government net position $ 198,699,974 $ 186,593,617 $ 207,593,356 $ 191,143,837 $ 218,101,669 $ 219,787,621 $ 209,452,802 $ 195,220,195 $ 189,095,128 $ 191,506,441 NOTE The fiscal years prior to 2015 show fund balances as they were reported prior to GASB No. 68. The Change in Net Position for fiscal 2017 includes a prior period adjustment for the OPEB Liability associated with GASB No. 74 & 75. 158

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 2 City of Dover, Delaware Changes in Net Position Last Ten Fiscal Years (Accrual basis of accounting) Fiscal Year 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Expenses Governmental activities: General government $ 3,443,595 $ 3,456,943 $ 4,648,999 $ 3,374,955 $ 1,288,977 $ 1,474,045 $ 1,180,327 $ 1,248,124 $ 1,510,308 $ 1,855,983 Public safety 17,441,023 14,947,553 19,919,050 21,336,042 19,219,986 17,989,463 17,638,304 16,848,343 16,357,692 15,929,187 Public works 7,736,355 6,942,760 7,381,557 3,848,402 6,594,829 6,099,484 8,135,172 6,257,946 7,115,319 7,539,463 Library and recreation 3,106,031 2,866,441 2,183,802 3,079,426 2,942,800 2,313,048 2,377,363 2,731,492 2,265,205 2,417,236 Community and economic development 513,857 449,356 551,879 444,474 676,554 939,966 773,208 1,173,546 2,228,744 724,555 Central services 589,846 473,498 483,426 443,072 512,586 454,816 469,385 599,498 544,611 550,886 Financial administration 964,051 746,714 1,249,012 1,247,976 1,368,048 1,122,830 1,146,524 2,463,426 2,353,180 2,557,465 Other post-employment benefits - - - - 3,348,267 5,119,778 6,534,630 6,142,627 2,843,480 2,441,541 Interest on long-term debt 129,723 118,275 118,565 174,912 122,812 114,785 90,161 75,397 78,581 87,491 Total governmental activities expenses 33,924,481 30,001,540 36,536,290 33,949,259 36,074,859 35,628,215 38,345,074 37,540,399 35,297,120 34,103,807 Business-type activities Water and sewer 11,728,740 11,416,394 11,925,299 11,322,958 11,397,992 10,905,358 11,068,607 10,912,722 11,971,445 11,196,913 Electric 72,553,319 62,992,850 61,054,151 67,562,077 74,481,048 74,595,585 77,625,673 90,296,244 90,940,056 94,475,940 Total business-type activities 84,282,059 74,409,244 72,979,450 78,885,035 85,879,040 85,500,943 88,694,280 101,208,966 102,911,501 105,672,853 Total primary government expenses 118,206,540 104,410,784 109,515,740 112,834,294 121,953,899 121,129,158 127,039,354 138,749,365 138,208,621 139,776,660 Program Revenues Governmental activities: Charges for services: General government 2,456,576 2,362,123 2,336,389 2,116,233 2,137,574 2,463,437 4,043,168 1,503,243 1,307,296 1,426,972 Public safety 5,367,450 5,171,989 4,920,783 4,558,200 4,676,162 4,240,847 4,803,827 4,682,687 4,309,516 4,358,641 Public works 3,714,187 2,514,645 2,527,478 2,578,892 2,595,648 2,624,877 1,903,623 2,173,434 1,340,729 1,396,801 Library and recreation 640,061 602,873 667,996 696,179 699,622 656,001 632,824 632,861 650,283 715,404 Operating grants and contributions 2,190,146 2,025,522 2,759,367 2,298,936 2,159,616 2,914,696 2,654,051 5,032,926 3,813,842 2,758,194 Capital grants and contributions 344,561 360,538 675,784 166,379 1,226,559 2,107,444 6,292,303 856,338 169,130 1,090,838 Total governmental activities program revenues 14,712,981 13,037,690 13,887,797 12,414,819 13,495,181 15,007,302 20,329,796 14,881,489 11,590,796 11,746,850 (Continued) 159

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section (Table 2 Continued - Changes in Net Position) Fiscal Year 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Program Revenues Business-type activities: Charges for services: Water and sewer 16,319,193 16,054,096 14,976,213 14,875,806 13,268,213 13,387,706 13,775,833 14,033,678 11,531,595 11,319,027 Electric 83,883,757 83,655,870 80,695,910 79,802,674 79,489,192 90,685,693 93,529,401 101,902,619 100,278,474 101,420,982 Capital contributions - 1,201,963 44,955 1,516,932 401,947 - 441,285 997,750 392,855 - Total business-type activities program revenues 100,202,950 100,911,929 95,717,078 96,195,412 93,159,352 104,073,399 107,746,519 116,934,047 112,202,924 112,740,009 Total primary government program revenues 114,915,931 113,949,619 109,604,875 108,610,231 106,654,533 119,080,701 128,076,315 131,815,536 123,793,720 124,486,859 Net (expense)/revenue: Governmental activities (19,211,500) (16,963,850) (22,648,493) (21,534,440) (22,579,678) (20,620,913) (18,015,278) (22,658,910) (23,706,324) (22,356,957) Business-type activities 15,920,891 26,502,685 22,737,628 17,310,377 7,280,312 18,572,456 19,052,239 15,725,081 9,291,423 7,067,156 Total primary government net revenue (expense) (3,290,609) 9,538,835 89,135 (4,224,063) (15,299,366) (2,048,457) 1,036,961 (6,933,829) (14,414,901) (15,289,801) General Revenues and Other Changes in Net Position Governmental activities: Property taxes 13,065,098 12,895,597 12,846,774 11,176,763 11,094,479 11,126,395 11,050,198 10,904,908 10,029,584 10,075,401 Transfer taxes 2,022,165 1,634,707 2,191,915 1,713,505 1,543,626 1,107,686 1,373,103 1,461,983 867,692 1,197,425 Investment earnings 100,903 132,228 263,667 92,479 142,390 36,793 141,925 137,218 268,748 585,264 Transfers 10,900,000 10,875,000 16,295,503 10,500,000 8,500,000 10,491,718 8,300,796 8,856,000 7,306,120 5,533,055 Total governmental activities 26,088,166 25,537,532 31,597,859 23,482,747 21,280,495 22,762,592 20,866,022 21,360,109 18,472,144 17,391,145 Business-type activities: Investment earnings 208,800 379,160 1,058,028 544,624 832,919 112,402 630,420 554,787 837,564 1,748,376 Transfers (10,900,000) (10,875,000) (16,295,503) (10,500,000) (8,500,000) (10,491,718) (8,300,796) (8,856,000) (7,306,120) (5,533,055) Total business-type activities (10,691,200) (10,495,840) (15,237,475) (9,955,376) (7,667,081) (10,379,316) (7,670,376) (8,301,213) (6,468,556) (3,784,679) Total primary government 15,396,966 15,041,692 16,360,384 13,527,371 13,613,414 12,383,276 13,195,646 13,058,896 12,003,588 13,606,466 Change in Net Position Government activities 6,876,666 8,573,682 8,949,366 1,948,307 (1,299,183) 2,141,679 2,850,744 (1,298,801) (5,234,180) (4,965,812) Business-type activities 5,229,691 16,006,845 7,500,153 7,355,001 (386,769) 8,193,140 11,381,863 7,423,868 2,822,867 3,282,477 Total primary government $ 12,106,357 $ 24,580,527 $ 16,449,519 $ 9,303,308 $ (1,685,952) $ 10,334,819 $ 14,232,607 $ 6,125,067 $ (2,411,313) $ (1,683,335) NOTE The Change in Net Position for fiscal 2015 includes a prior period adjustment for the Net Pension Liability associated with GASB No. 68. 160

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 3 City of Dover, Delaware Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified accrual basis of accounting) Fiscal Year 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 General fund Reserved $ - $ - $ - $ - $ - $ - $ - $ - $ 315,580 $ 709,817 Unreserved - - - - - - - - 7,242,323 8,305,396 Non-spendable 259,258 187,294 195,134 202,620 207,884 227,457 198,175 191,567 - - Restricted 10,572 7,979 173,769 127,706 129,476 131,237 83,356 85,070 - - Committed 1,111,182 2,441,641 1,059,197 1,041,130 723,300 936,899 920,475 3,484,203 - - Assigned 2,865,373 1,956,061 2,735,602 3,839,571 3,163,431 3,519,012 658,890 614,559 - - Unassigned 7,722,505 5,528,605 4,995,522 3,991,442 3,435,079 3,391,714 3,007,983 3,385,209 - - Total general fund 11,968,890 10,121,580 9,159,224 9,202,469 7,659,170 8,206,319 4,868,879 7,760,608 7,557,903 9,015,213 All other governmental funds Special revenue funds Unreserved - - - - - - - - 872,309 881,332 Non-spendable 9,990 3,993 350 181 2,447 - 13,099 4,203 - - Restricted 950,529 298,495 758,959 428,847 482,578 590,445 399,424 764,512 - - Assigned - - - - - 123,349 171,381 289,221 - - Total all other governmental funds 960,519 302,488 759,309 429,028 485,025 713,794 583,904 1,057,936 872,309 881,332 Total fund balances $ 12,929,409 $ 10,424,068 $ 9,918,533 $ 9,631,497 $ 8,144,195 $ 8,920,113 $ 5,452,783 $ 8,818,544 $ 8,430,212 $ 9,896,545 NOTE The fiscal years prior to 2011 show fund balances as they were classified and reported prior to GASB No. 54. 161

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 4 City of Dover, Delaware Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified accrual basis of accounting) Fiscal Year 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Revenues Fines $ 1,121,135 $ 1,142,722 $ 1,128,211 $ 1,161,876 $ 1,011,156 $ 912,004 $ 1,202,615 $ 1,665,496 $ 1,418,354 $ 1,323,041 Library revenue 392,108 380,561 419,677 480,823 498,553 471,065 475,822 444,455 465,387 514,458 Licenses and permits 3,786,167 3,548,401 3,525,992 2,893,990 2,952,015 2,548,913 2,816,866 2,417,363 2,424,768 2,599,948 Sanitation fees and rebates 3,133,360 2,514,645 2,527,478 2,578,892 2,595,648 2,624,877 1,903,623 2,173,434 1,340,729 1,396,801 Recreation 87,125 53,301 65,145 66,038 49,144 40,446 44,522 44,292 36,100 47,079 Miscellaneous services 2,210,980 1,679,390 1,874,534 1,650,153 1,831,683 2,470,200 3,940,294 1,480,845 1,247,096 1,278,251 Taxes 15,125,329 14,564,304 15,085,481 12,930,532 12,655,035 12,333,520 12,462,532 12,366,891 10,897,276 11,272,826 Grants 2,534,707 2,386,060 3,449,238 2,489,239 3,416,319 5,119,089 8,909,758 5,551,175 4,482,259 3,513,365 Court of chancery fees 1,496,520 1,343,020 1,239,300 1,118,680 1,034,460 917,700 863,220 766,340 675,390 738,240 Investment income 93,751 123,234 234,885 77,769 122,490 45,198 117,405 112,722 237,631 513,873 Total revenues 29,981,182 27,735,638 29,549,941 25,447,992 26,166,503 27,483,012 32,736,657 27,023,013 23,224,990 23,197,882 Expenditures General government 1,710,100 2,026,568 2,116,749 1,425,786 1,271,523 1,107,122 1,093,772 1,348,911 1,525,854 1,661,742 Library services 1,981,201 1,926,561 1,720,021 1,675,989 1,697,982 5,514,217 13,518,569 4,369,578 1,951,347 2,150,585 Public safety 21,018,381 21,248,561 21,240,506 20,218,519 19,130,832 18,048,642 17,001,619 16,139,953 15,948,298 15,680,044 Public works 1,918,473 2,119,186 2,146,917 1,708,658 2,572,965 1,758,405 2,074,061 2,535,060 2,504,061 3,219,659 Recreational services 821,613 733,961 783,976 865,938 683,363 651,341 827,230 834,124 746,868 869,134 Streets and sanitation services 4,637,145 4,275,648 6,081,813 6,574,262 4,634,091 2,990,430 3,280,165 3,383,465 3,181,025 3,279,188 Engineering services 263,930 219,198 166,579 26,996 - - - - - - Financial administration 762,860 764,622 919,086 979,112 1,002,539 909,877 902,009 866,314 895,570 1,009,240 Garage and stores 499,289 501,559 465,843 419,597 415,593 431,542 503,036 490,113 526,286 491,450 Insurance 302,258 295,923 280,901 278,682 272,895 241,395 198,241 203,343 197,723 199,643 Retiree health care lump sum 2,063,000 2,039,700 1,567,700 1,636,500 1,636,500 1,620,600 1,614,241 1,297,509 1,006,397 3,265,857 Employee pension unfunded liability 619,000 - 594,300 543,000 121,000 1,693,500 1,545,000 1,544,978 - - Street lights 803,924 811,992 804,246 775,197 774,533 878,760 986,430 968,562 956,860 937,013 Community and economic development 513,857 449,356 551,879 444,474 676,554 939,966 773,208 1,173,546 2,228,744 724,555 (Continued) 162

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 4 (Continued) - Changes in Fund Balances of Governmental Funds Fiscal Year 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Expenditures Debt service Principal 332,355 573,497 553,824 848,069 429,239 296,003 275,000 270,000 260,000 365,000 Interest 128,455 118,771 118,565 114,243 122,812 73,071 52,734 65,225 68,410 77,319 Other charges (issuance of debt) - - - 60,668 - 1,029 27,255 - - - Total expenditures 38,375,841 38,105,103 40,112,905 38,595,690 35,442,421 37,155,900 44,672,570 35,490,681 31,997,443 33,930,429 Excess of revenues over(under) expenditures (8,394,659) (10,369,465) (10,562,964) (13,147,698) (9,275,918) (9,672,888) (11,935,913) (8,467,668) (8,772,453) (10,732,547) Other financing sources (uses) Bond proceeds - - - 4,135,000 - 2,648,500 851,500 - - - Transfers in 14,220,407 13,885,445 14,339,821 13,500,366 11,458,445 12,666,208 10,959,204 12,420,329 9,156,575 12,683,925 Transfers out (3,320,407) (3,010,445) (3,489,821) (3,000,366) (2,958,445) (2,174,490) (2,658,408) (3,564,329) (1,850,455) (7,150,870) Total other financing sources (uses) 10,900,000 10,875,000 10,850,000 14,635,000 8,500,000 13,140,218 9,152,296 8,856,000 7,306,120 5,533,055 Net change in fund balances $ 2,505,341 $ 505,535 $ 287,036 $ 1,487,302 $ (775,918) $ 3,467,330 $ (2,783,617) $ 388,332 $ (1,466,333) $ (5,199,492) Debt service as a percentage of noncapital expenditures 1.27% 1.97% 1.96% 3.09% 1.74% 1.14% 1.07% 0.85% 1.05% 1.42% Capital outlay included in total expenditures (1) $ 2,066,950 $ 2,973,131 $ 5,753,588 $ 7,500,186 $ 3,777,578 $ 4,872,122 $ 13,927,288 $ 5,296,536 $ 2,434,391 $ 2,698,627 NOTES (1) Capital outlay has been included in functional expenditures. Debt service as a percentage of non-capital expenditures excludes capital outlay expenditures. 163

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 5 City of Dover, Delaware Governmental Activities Tax Revenues by Source Last Ten Fiscal Years (accrual basis of accounting) Fiscal Property Transfer Year Tax Tax Total 2018 $ 13,065,098 $ 2,022,165 $ 15,087,263 2017 12,895,597 1,634,707 14,530,304 2016 12,846,772 2,191,915 15,038,687 2015 11,176,763 1,713,788 12,890,551 2014 11,094,479 1,543,626 12,638,105 2013 11,126,395 1,107,686 12,234,081 2012 11,050,198 1,373,103 12,423,301 2011 10,904,908 1,461,983 12,366,891 2010 10,029,584 867,692 10,897,276 2009 10,075,401 1,197,425 11,272,826 NOTES 1. Property Tax rate of $.4050 per $100 of 100% assessed value (See Table 6 for tax rates). Revenues include payments in lieu of taxes, farm land roll back and penalties. 2. Transfer Taxes equal 1.5% of the real property sales value. 164

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 6 City of Dover, Delaware Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years REAL PROPERTY Ratio of Direct Less: Total Taxable Tax Fiscal Total Assessed Exempt Total Taxable Estimated Value to Total Rate Year Value Properties Assessed Value Actual Value Assessed Value Per $100 2018 $ 4,553,536,100 $ 1,338,792,000 $ 3,214,744,100 $ 4,553,536,100 70.60% $ 0.4050 2017 4,493,113,000 1,336,802,000 3,156,311,000 4,493,113,000 70.25% 0.4050 2016 4,443,188,600 1,335,276,500 3,107,912,100 4,443,188,600 69.95% 0.4050 2015 4,584,108,050 1,376,954,490 3,207,153,560 4,584,108,050 69.96% 0.3378 2014 4,525,547,960 1,365,654,100 3,159,893,860 4,525,547,960 69.82% 0.3378 2013 4,510,303,860 1,328,807,500 3,181,496,360 4,510,303,860 70.54% 0.3378 2012 4,469,369,160 1,300,061,400 3,169,307,760 4,469,369,160 70.91% 0.3378 2011 4,363,518,360 1,226,879,300 3,136,639,060 4,363,518,360 71.88% 0.3378 2010 4,139,869,700 1,232,858,580 2,907,011,120 4,139,869,700 70.22% 0.3300 2009 4,124,562,920 1,225,269,600 2,899,293,320 4,124,562,920 70.29% 0.3300 Source: Tax Assessor's Office, City of Dover. NOTES 1. There is no tax on personal properties. Therefore, no figures are presented. 2. In 2010, the City property values were reassessed, effective for tax year 2011. The tax rate was increased from $ .330 to $ .3378 per $100. Had the tax rate been rolled back to a revenue neutral rate, the rate would have been $ .3108 per $100. The revised rate represents a $ .027 rate increase. 3. In 2015, the City property values were reassessed, effective for tax year 2016. The tax rate was increased from $ .3378 to $ .4050 per $100. Had the tax rate been rolled back to a revenue neutral rate, the rate would have been $ .3499 per $100. The revised rate represents a $ .0672 increase. 165

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 7 NOTES City of Dover, Delaware 1. Section 48 of the City of Property Tax Rates - All Direct and Overlapping Dover charter provides that Governments with the Capital School District the amount of money to be (Per $100 of Assessed Value) raised through property Last Ten Fiscal Years taxes shall not exceed 2% of the total taxable assessment. 2. Kent County Property tax Direct Overlapping rates reflect the 1987 City Capital Vo-Tech Total reappraisal of properties in Fiscal of Kent School School Direct & Kent County. Year Dover County District District Overlapping 3. In 2010, the City property 2018 $ 0.4050 $ 0.300 $ 1.794 $ 0.1522 $ 2.651 values were reassessed, 2017 0.4050 0.300 1.807 0.1484 2.660 effective for tax year 2011. 2016 0.4050 0.300 1.812 0.1415 2.658 Tax rate increased to 2015 0.3378 0.300 1.822 0.1372 2.597 $.3378. 2014 0.3378 0.300 1.850 0.1372 2.625 2013 0.3378 0.300 1.909 0.1372 2.684 4. In 2015, the City property 2012 0.3378 0.300 1.832 0.1351 2.605 values were reassessed, 2011 0.3378 0.300 1.832 0.1351 2.605 effective for tax year 2016. 2010 0.3300 0.310 1.769 0.1304 2.539 Tax rate increased to 2009 0.3300 0.310 1.543 0.1219 2.305 $.4050. Sources: Tax Assessor's Office - City Receiver of Taxes Office - Kent County Property Tax Rates - FY 2018 All Direct & Overlapping Governments City of Dover Kent County Capital School Vo-Tech School 166

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 8 Principal Tax Payers Current Year and Nine Years Ago PERCENTAGE PERCENTAGE OF TOTAL OF TOTAL 2018 TAXABLE 2009 TAXABLE ASSESSED ASSESSED ASSESSED ASSESSED TAX PAYERS VALUATION RANK VALUATION VALUATION RANK VALUATION Dover Downs Prop, Inc. $147,924,900 1 3.25% $168,411,200 1 5.81% Dover Mall LP/Dover Commons 81,943,600 2 1.80% 75,714,000 2 2.61% Dover Medical Center 39,202,300 3 0.86% 24,887,600 3 - CW Dover LLC FKA Dover South Coast 23,071,400 4 0.51% 14,470,300 8 0.50% Kraft-General Foods Corp. 21,534,700 5 0.47% 20,624,800 4 0.71% Leander Lakes LLC 22,687,700 6 0.50% - - - Onix Dover LLC 16,617,800 7 0.36% 8,951,100 - 0.31% GM Country Club LLC 15,788,600 8 0.35% 11,415,800 - 0.39% Multi Residential M LLC 14,415,500 9 0.32% 10,343,500 - 0.36% Blue Hen Apt LLC 19,840,700 10 0.44% - - - Millers Dover Downs - - - 14,837,900 7 0.51% Dover Bay Court Plaza - - - 19,107,300 5 0.66% Berks City Real Estate LLC - - - 18,034,400 6 0.62% Dover East Estates - - - 11,647,200 10 0.40% Robino Cannon Mill Apts - - - 11,650,000 9 0.40% $403,027,200 8.85% $410,095,100 13.29% Source: Tax Assessor's Office, City of Dover Total taxable assessed valuation for current year is 4,553,536,100 Total taxable assessed valuation for ten years ago is 2,899,293,320 167

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 9 City of Dover, Delaware Property Tax Levies and Collections Last Ten Fiscal Years Total Collected Within Collection Collected in Total Collection Fiscal Tax the Fiscal Year as Percentage Subsequent Collections as Percentage Year Levy of the Levy of Levy Years to Date of Levy 2018 $ 12,669,581 $ 12,628,024 99.7% $ - $ 12,628,024 99.67% 2017 12,478,630 12,401,338 99.4% 70,904 12,472,242 99.95% 2016 12,437,857 12,204,948 98.1% 232,197 12,437,145 98.13% 2015 10,737,703 10,612,272 98.8% 125,431 10,737,703 100.00% 2014 10,696,886 10,493,954 98.1% 202,932 10,696,886 100.00% 2013 10,594,623 10,398,888 98.2% 195,735 10,594,623 100.00% 2012 10,549,631 10,280,930 97.5% 268,701 10,549,631 100.00% 2011 10,481,734 10,166,681 97.0% 315,053 10,481,734 100.00% 2010 9,525,034 9,314,327 97.8% 210,707 9,525,034 100.00% 2009 9,512,522 9,206,158 96.8% 306,364 9,512,522 100.00% Source: City of Dover Assessor & Customer Service Reports. Property Taxes Levied Last Ten Fiscal Years $13 $11 Millions $9 $7 $5 $3 $1 $(1) 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 NOTES 1. Section 48 of the City of Dover charter provides that the maximum budget to be raised through property taxes shall not exceed 2% of the total taxable assessment. 2. Total Tax Levy represents the annual tax billings, quarterly billings and adjustments from tax appeals. 3. The table excludes payments in lieu of taxes and farm land roll back taxes. 168

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 10 City of Dover, Delaware Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Business-type Activities General Water/Sewer Electric Total Percentage Fiscal Obligation Revenue Revenue Primary of Personal Per Year Bonds Bonds Bonds Government Income Capita Population 2018 $ 5,877,013 $ 11,312,399 $ 17,890,000 $ 35,079,412 4.1% 921 38,102 2017 6,209,368 12,111,088 18,620,000 36,940,456 4.3% 978 37,786 2016 6,782,865 12,888,791 19,315,000 38,986,656 4.6% 1,041 37,618 2015 7,336,689 13,650,787 21,680,000 42,667,476 5.4% 1,137 37,540 2014 4,049,758 14,412,347 23,940,000 42,402,105 5.4% 1,130 36,722 2013 4,478,997 10,926,717 26,110,000 41,515,714 5.1% 1,138 36,492 2012 2,085,815 10,865,354 27,995,025 40,946,194 5.0% 1,129 36,267 2011 1,499,143 7,913,384 30,033,446 39,445,973 4.9% 1,070 37,341 2010 1,758,971 3,765,547 34,543,730 40,068,248 5.7% 1,112 36,559 2009 2,008,800 4,126,124 36,690,524 42,825,448 6.3% 1,200 36,107 Source: City of Dover Financial Records Population Source: Delaware Population Consortium Annual Population Projections 169

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 11 Ratio of Net General Obligation Bonded Debt To Assessed Value and Net Bonded Debt Per Capita Last Ten Fiscal Years Ratio of Net Net Net Bonded Bonded Taxable Gross Net Debt To Debt Fiscal Assessed Bonded Bonded Assessed Per Year Population Value Debt Debt Value Capita 2018 38,102 $3,214,744,100 $ 5,877,013 $ 5,877,013 0.18% 154.24 2017 37,786 3,104,441,800 6,209,368 6,209,368 0.20% 164.33 2016 37,618 3,061,687,700 6,782,865 6,782,865 0.22% 180.31 2015 37,540 3,169,706,860 7,336,689 7,336,689 0.23% 195.44 2014 36,722 3,159,893,860 4,049,758 4,049,758 0.13% 110.28 2013 36,492 3,181,496,360 4,478,997 4,478,997 0.14% 122.74 2012 36,267 3,169,307,760 2,085,815 2,085,815 0.07% 57.51 2011 37,341 3,136,639,060 1,499,143 1,499,143 0.05% 40.15 2010 36,559 2,907,011,120 1,550,000 1,550,000 0.05% 42.40 2009 36,107 2,899,293,320 1,550,000 1,550,000 0.05% 42.93 Source: City of Dover Financial Records, Tax Assessor’s Office and Delaware Population Consortium Annual Population Projections. NOTES 1. This table includes all long-term general obligation bonded debt only. The Enterprise Funds have no general obligation debt. 2. Assessed value reflects the net billable tax base and does not include the exempt value, exemption for Senior Citizens and exemption for disability. 170

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 12 City of Dover, Delaware Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures Last Ten Fiscal Years Ratio of Debt Service Total Total to Total Fiscal Debt General General Year Principal Interest Service Expenditures(1) Expenditures 2018 $ 332,355 $ 128,455 $ 460,810 $ 44,049,712 1.05% 2017 573,497 118,771 692,268 44,378,544 1.56% 2016 553,824 118,565 672,389 46,477,667 1.45% 2015 848,069 114,243 962,312 45,484,211 2.12% 2014 429,239 122,812 552,051 39,646,120 1.39% 2013 296,003 73,071 369,074 40,517,512 0.91% 2012 275,000 52,734 327,263 47,743,864 0.69% 2011 270,000 65,225 335,225 38,898,945 0.86% 2010 260,000 68,410 328,410 32,786,465 1.00% 2009 365,000 77,319 442,319 33,766,292 1.31% Source: City of Dover Financial Records. NOTES 1. The General Expenditures include all operating items, capital items and debt service. 171

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 13 City of Dover, Delaware Computation of Direct and Overlapping Debt with the Capital School District June 30, 2018 Percentage Amount Net Debt Applicable to Applicable to Jurisdiction Outstanding City of Dover City of Dover City of Dover $ 5,877,013 100% $ 5,877,013 Kent County (1) 53,748,634 0% N/A Capital School District (2) 51,016,775 N/A N/A TOTAL $ 110,642,422 $ 5,877,013 Sources: City of Dover Financial Records, Kent County Levy Court - Accounting Department and Capital School District - Administration Department. NOTES 1. Kent County: Total debt for Kent County is $53,748,634 as of June 30, 2018. Although Kent County's bonds are general obligation bonds, $49,910,955 is payable from the Kent County Sewer Fund(s) or other committed sources. 2. Capital School District: As of June 30, 2018, the net outstanding debt was $51,016,775. Percentage and amount is not applicable to the City of Dover. 172

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 14 Computation of Legal Debt Margin Last Ten Fiscal Years (amounts expressed in thousands) Fiscal Year 2018 2018 2016 2015 2014 2013 2012 2011 2010 2009 Debt Limit $ 160,737 $ 157,816 $ 155,396 $ 158,485 $ 157,995 $ 159,075 $ 158,465 $ 156,832 $ 145,351 $ 144,965 Net (Taxable) Assessed Value on Books 3,214,744 3,156,311 3,107,912 3,207,154 3,159,894 3,181,496 3,169,308 3,136,639 2,907,011 2,899,293 Total net debt applicable to limit 5,877 6,209 6,783 7,337 4,050 4,479 1,550 1,820 2,080 2,445 Legal Debt Margin $ 154,860 $ 151,606 $ 148,613 $ 151,149 $ 153,945 $ 154,596 $ 156,915 $ 155,012 $ 143,271 $ 142,520 Total Net Debt applicable to limit as a percentage of debt limit 3.66% 3.86% 4.36% 4.63% 2.56% 2.82% 0.98% 1.16% 1.43% 1.69% Legal Debt Margin Calculation for Fiscal Year 2016 Net (Taxable) Assessed Value on Books $ 3,214,744 Debt Limit - 5 Percent of Total Assessed Value $ 160,737 DEBT (For which the City's full faith and credit has been pledged) Gross Bonded Debt 5,877 LEGAL DEBT MARGIN $ 154,860 Source: City of Dover Financial Reports, City of Dover Charter, Section 50(b), and Tax Assessor's Office July 2009 the Charter was amended and the debt limit was reduced from 25% of the total assessed value to 5%. 173

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 15 City of Dover, Delaware Revenue Bond Coverage - Electric Revenue Bonds Last Ten Fiscal Years Available Fiscal Gross Operating For Debt Debt Service Requirements of Each Fiscal Year Year Revenue Expenses Service Principal Interest Total Coverage 2018 $ 84,235,174 $ 60,595,349 $ 23,639,825 $ 730,000 $ 847,454 $ 1,577,454 14.99 2017 83,943,882 54,748,915 29,194,967 695,000 883,954 1,578,954 18.49 2016 80,846,658 54,418,343 26,428,315 2,365,000 918,704 3,283,704 8.05 2015 79,769,994 66,521,873 13,248,121 2,260,000 1,036,954 3,296,954 4.02 2014 79,476,865 68,594,189 10,882,676 2,170,000 1,131,854 3,301,854 3.30 2013 90,876,162 68,546,508 22,329,654 2,110,000 1,205,554 3,315,554 6.73 2012 93,650,277 71,607,021 22,043,256 2,060,000 1,260,054 3,320,054 6.64 2011 102,734,764 84,195,802 18,538,962 2,370,000 1,609,192 3,979,192 4.66 2010 100,316,323 86,089,451 14,226,872 2,260,000 1,716,134 3,976,134 3.58 2009 101,562,292 89,853,449 11,708,843 1,840,000 1,753,447 3,593,447 3.26 Source: City of Dover Financial Records. NOTES 1. Coverage required by the bond resolution is 1.25. 4. Figures presented in this table compare the net revenue available for debt service to the debt service requirements of the same fiscal year. 2. Calculation of gross revenue for fiscal year 2018 is as follows: Gross Revenue: 5. In July 2008, the City issued Electric Revenue bonds in the Operating Revenues $ 83,881,392 amount of $22,200,000. Fiscal year 2009 includes $1,026,999 of Interest Earned-Operating Funds 353,782 interest related to this bond issue. Total Gross Revenue $ 84,235,174 6. In November 2011, the City issued Electric Revenue Refunding 3. Direct operating expenses do not include depreciation expense. Bonds in the amount of $8,810,000 to refund the 2014 Series. This refunding reduced the principal payable by $2,620,000. 174

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 16 City of Dover, Delaware Revenue Bond Coverage - Water/Wastewater Bonds Last Ten Fiscal Years Maximum Requirements Net Revenue Maximum Direct Available Debt Fiscal Gross Operating For Debt Service Actual Year Revenue Expenses Service Requirement Coverage 2018 $ 14,975,823 $ 9,046,827 $ 5,928,996 $ 1,132,806 5.23 2017 15,354,263 8,906,722 6,447,541 1,132,806 5.69 2016 15,005,695 9,621,676 5,438,408 1,132,806 4.80 2015 14,385,625 9,250,346 5,637,043 1,132,806 4.98 2014 13,307,253 9,326,405 3,980,848 1,132,806 3.51 2013 13,282,782 8,841,757 4,441,025 1,019,315 4.36 2012 13,647,145 9,063,553 4,583,592 993,837 4.61 2011 13,758,048 9,222,105 4,535,943 416,423 10.89 2010 11,204,911 10,319,728 885,183 416,423 2.13 2009 11,067,901 9,510,814 1,557,087 797,708 1.95 Source: City of Dover Financial Records. NOTES 1. Coverage required by bond resolution is 1.20. 2. The maximum debt service requirement presented above covers all revenue bond requirements. Rates were increased in 2011 for debt service coverage on multi-year projects. 3. Direct operating expenses do not include depreciation expense for coverage purposes as per the bond indenture. 4. In Fiscal year 2013, various capital projects were completed. These capital projects were financed by three state revolving fund loans issued in 2009, 2010 & 2011 in the amount of $5.9 million, $2.4 million and $0.8 million, respectively, resulting in an increase in debt service. 5. In Fiscal year 2014, the City issued Water and Sewer Revenue Bonds in the amount of $6,125,000. These bonds were issued to refund the Series 2003 Water and Wastewater Revenue bonds and provided $4,005,960 for two capital projects. 6. Gross Revenue includes $16,311,785 Operating Revenue plus $140,852 Operating Interest less transfers to the Water & Sewer Impact Fee Reserves $1,476,814. 175

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 17 City of Dover, Delaware Top 10 Water and Wastewater Utility Customers Fiscal Year Ended June 30, 2018 Water % of % of Consumption Total Revenue Total Customer (Tgal) Consumption Billed Revenue Garrison Energy Center, LLC 112,788 6.7% $ 338,364 6.24% Procter & Gamble, Co. 34,318 2.0% 102,954 1.90% Delaware State University 30,347 1.8% 91,089 1.68% Dover Downs, Inc. 22,282 1.3% 66,846 1.23% Kraft Foods Global, Inc. 19,945 1.2% 59,835 1.10% Kent General Hospital 17,684 1.0% 53,052 0.98% Sovereign Property Management 13,026 0.8% 39,078 0.72% Bayhealth Medical Center 12,953 0.8% 38,859 0.72% Dover Housing Authority 11,027 0.7% 33,155 0.61% Dover East Estates, LLP 8,639 0.5% 25,917 0.48% Totals for Top 10 Customers 283,009 16.7% 849,149 15.67% All Other 1,409,398 83.28% 4,570,365 84.33% Total for System 1,692,407 100.00% $ 5,419,514 100.00% Wastewater % of % of Consumption Total Revenue Total Customer (Tgal) Consumption Billed Revenue Kraft Foods Global, Inc. 47,086 3.8% $ 234,989 4.34% Dover Downs, Inc. 41,181 3.4% 200,479 3.70% Procter & Gamble, Co. 34,092 2.8% 170,210 3.14% Kent General Hospital 26,310 2.1% 171,202 3.16% Garrison Energy Center, LLC 26,175 2.1% 130,626 2.41% Sovereign Property Management 19,566 1.6% 128,003 2.36% Bayhealth Medical Center 19,461 1.6% 87,765 1.62% Dover Housing Authority 19,312 1.6% 128,217 2.37% Dover East Estates, LP 14,169 1.2% 98,986 1.83% Delaware State University 8,772 0.7% 48,750 0.90% Totals for Top 10 Customers 256,124 20.9% 1,164,238 21.48% All Other 967,981 79.08% 7,132,554 78.52% Total for System 1,224,105 100.00% $ 8,296,792 100.00% NOTES: 1. Both the Water and Wastewater revenue billed amounts for each vendor, do not include the monthly flat rate of $2.50. 2. The total Revenue amounts for both Water and Wastewater include the monthly flat rates. 176

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 18 City of Dover, Delaware Top 10 Electric Utility Customers Fiscal Year Ended June 30, 2018 % of Total Revenue % of Total Customer Kwh Kwh Billed Revenue Dover Air Force Base 95,726,778 12.9% $ 3,763,988 4.7% Kraft Foods Global Inc 54,055,640 7.3% 2,011,042 2.5% Edgewell Personal Care Brands 50,793,828 6.8% 2,068,785 2.6% Delaware State University 32,805,076 4.4% 1,317,295 1.6% Bay Health/Kent General 31,145,188 4.2% 1,214,268 1.5% Dover Downs Inc 29,306,458 3.9% 1,065,146 1.3% State of Delaware 17,926,924 2.4% 870,366 1.1% Proctor and Gamble Company 15,508,814 2.1% 579,981 0.7% Capital School District 12,419,031 1.7% 625,183 0.8% Wesley College 7,998,952 1.1% 355,370 0.4% Totals for Top 10 Customers 347,686,689 46.8% 13,871,425 17.3% All Other 394,553,947 53.2% 66,424,075 82.7% Total for System 742,240,636 100.0% $ 80,295,500 100.0% Note: The revenue billed includes direct base sales and utility Tax. 177

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 19 City of Dover, Delaware Demographic and Economic Statistics Last Ten Calendar Years Per Capita Personal Personal Median School Unemployment Year Population Income Income Age Enrollment Rate 2018 38,102 $ 865,182,114 $ 22,707 29.5 6,494 5.8% 2017 37,686 827,207,700 21,950 30.0 6,523 6.2% 2016 37,453 842,783,433 22,213 30.2 6,486 5.7% 2015 37,618 730,354,200 19,445 31.3 6,665 7.4% 2014 37,540 788,039,680 20,992 29.8 6,527 6.4% 2013 36,492 821,361,936 22,508 31.1 6,344 9.6% 2012 36,267 828,258,924 22,697 33.2 6,984 9.3% 2011 36,047 818,158,759 22,379 31.3 7,185 9.9% 2010 36,559 712,212,015 19,445 32.9 7,117 10.2% 2009 35,997 712,212,015 19,445 32.9 6,996 10.2% Population Source: City Count Personal Income Source: Estimation based on Population times Per Capita Personal Income Per Capita Personal Income Source: U.S. Census Bureau, 2012-2016 American Community Survey 5-Year Estimates Median Age Source: 2012-2016 American Community Survey 5-Year Estimates Capital School Enrollment Source: Includes kindergarten through 12th grade, as of Summer 2018 Unemployment Rate Source: Delaware Department of Labor Statistics Not Seasonally Adjusted, June 2018 178

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 20 City of Dover, Delaware Major Employers Current Year and Nine Years Ago 2017 4th Quarter 2008 4th Quarter Percentage of Percentage of Name Number of Total City Number of Total City Employees Rank Employment Employees Rank Employment Government 18,463 1 27.8% 18,502 1 29.6% Retail trade 9,739 2 14.7% 9,853 2 15.8% Health care & social assistance 9,682 3 14.6% 7,761 3 12.4% Accommodation & food services 5,537 4 8.3% 4972 4 8.0% Manufacturing 5,032 5 7.6% 3502 5 5.6% Arts, entertainment, & recreation 2,655 6 4.0% 2130 9 3.4% Construction 2,504 7 3.8% 2632 6 4.2% Transportation & warehousing 2,474 8 3.7% 2,126 7 3.4% Admin and waste services 2,395 9 3.6% 2,316 8 3.7% Professional & technical services 2,014 10 3.0% 1,370 10 2.2% 60,495 91.0% 55,164 88.4% Total - All Industries 66,465 62,433 Source: Delaware Department of Labor/Office of Occupational and Labor Market Information/Payroll Data/Quarterly Census of Employment and Wages (Geography information is available by County only, not by City) Note: The names of the top employers & number of employees is confidential and may not be disclosed to the public pursuant to 20 CFR (Code of Federal Regulations) Part 603. As a result, the employment information provided is by industry. 179

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 21 City of Dover, Delaware Full-time Equivalent City Government Employees by Function - Budgeted Last Ten Fiscal Years 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Assessor 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 4.5 4.5 City Clerk 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 City Manager 5.0 4.0 4.0 4.0 4.0 3.0 5.0 5.0 5.0 5.0 Customer Services 16.0 13.0 14.0 14.0 15.0 14.0 14.0 15.0 16.0 16.0 Facilities Management 5.0 5.0 7.0 7.0 7.0 9.0 12.0 13.0 13.0 13.0 Finance 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 Fire 5.0 5.0 5.0 6.0 8.0 6.0 6.0 6.0 6.0 6.0 Fleet Maintenance 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 Human Resources 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 4.0 4.0 Information Technology 4.0 4.0 4.0 5.0 5.0 5.0 5.0 7.0 8.0 8.0 Library 13.0 13.0 13.0 14.0 13.0 13.0 12.0 17.5 18.0 18.0 Mayor 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Parks and Recreation 5.0 5.0 5.0 5.0 5.0 5.0 6.0 8.0 8.0 8.0 Police Civilian 33.0 33.0 33.0 31.0 31.0 29.0 29.0 29.0 29.0 29.0 Police Law Enforcement 101.0 101.0 101.0 93.0 93.0 93.0 93.0 91.0 90.0 93.0 Procurement & Inventory 3.0 3.0 3.0 3.0 4.0 4.0 6.0 6.0 8.0 8.0 Public Works, Administration 6.0 6.0 6.0 5.0 5.0 6.0 5.0 4.0 4.0 4.0 Planning, Inspections 6.0 6.0 6.0 6.0 6.0 7.0 7.0 7.0 7.0 7.0 Planning, Life Safety 3.0 3.0 3.0 3.0 3.0 3.0 3.0 4.0 4.0 4.0 Economic Development - - 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Public Works, Engineering 3.0 3.0 3.0 3.0 - - - - - - Planning 6.0 6.0 6.0 5.0 4.5 4.5 5.0 5.0 6.0 6.0 Planning, Code Enforcement 5.0 5.0 5.0 5.0 5.0 4.0 4.0 4.5 5.0 5.0 Community Development - - - - 0.5 0.5 1.0 1.0 1.0 1.0 Public Works, Grounds Maintenance 13.0 13.0 13.0 13.0 14.0 14.0 14.0 15.0 16.0 16.0 Public Works, Sanitation 10.0 10.0 10.0 11.0 11.0 11.0 13.0 12.0 13.0 13.0 Public Works, Streets 8.0 8.0 8.0 8.0 8.0 10.0 11.0 11.0 11.0 11.0 General Fund Total 275.0 271.0 277.0 269.0 270.0 269.0 279.0 289.0 298.5 301.5 Public Utilities, Electric Administration 5.0 5.0 4.0 3.0 3.0 3.0 4.0 4.0 4.0 4.0 Public Utilities, Electric Engineering 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 12.5 12.5 Public Utilities, Electric System OPS 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Public Utilities, Electric Meter Reading 4.0 4.0 4.0 3.0 3.0 3.0 3.0 3.0 4.0 4.0 Public Utilities, Electric Transmission & Distribution 24.0 24.0 24.0 24.0 24.0 24.0 25.0 25.0 28.0 28.0 Electric Fund Total 48.0 48.0 47.0 45.0 45.0 45.0 47.0 47.0 53.5 53.5 Public Utilities, Construction - - - 3.0 3.0 5.0 6.0 6.0 7.0 7.0 Public Utilities, Wastewater Engineering 5.0 5.0 5.0 5.0 5.0 6.0 6.0 6.0 8.0 8.0 Public Utilities, Wastewater Management 11.0 11.0 11.0 11.0 11.0 10.0 10.0 9.0 11.0 11.0 Public Utilities, Water Management 6.0 6.0 6.0 4.0 4.0 5.0 4.0 4.0 5.0 5.0 Public Utilities, Water Treatment Plant 13.0 13.0 13.0 11.0 11.0 10.0 10.0 10.0 10.0 10.0 Water Meter Reading - - - - - - - - 1.0 1.0 Water/Wastewater Fund Total 35.0 35.0 35.0 34.0 34.0 36.0 36.0 35.0 42.0 42.0 Total Full-Time Equivalents 358.0 354.0 359.0 348.0 349.0 350.0 362.0 371.0 394.0 397.0 Source: City of Dover Budget 180

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 22 City of Dover, Delaware Operating Indicators and Capital Assets Used in Operations Last Ten Fiscal Years June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 June 30, 2013 June 30, 2012 June 30, 2011 June 30, 2010 June 30, 2009 Land area - Acres 15191.7 15191.7 15191.7 14914.5 14909.33 14,909.33 14,909.33 14,909.33 14,909.33 14,904.90 Land area - Square Miles 23.74 23.74 23.74 23.3 23.29 23.29 23.29 23.29 23.29 22.586 Total Miles of Street 170.33 169.08 168.01 167.78 164.49 164.08 162.81 158.94 159.62 159.62 City Maintained Miles of Streets 110.98 109.73 108.66 108.43 105.14 104.73 103.46 101.59 100.27 100.27 State Maintained Miles of Streets 59.35 59.35 59.35 59.35 53.35 59.35 59.35 57.35 59.35 59.35 Dover Population - U. S. Census data 36,047 36,047 36,047 36,047 36,047 36,047 36,047 36,047 32,043 32,043 Dover Population - City Count 38,102 37,786 37,618 37,540 36,722 36,492 36,267 37,341 36,559 36,107 Registered Voters 24,513 23,942 24,170 22,837 22,779 21,998 22,362 21,454 21,897 21,897 Electric Utility: Generating Units 2 2 4 4 4 4 4 4 4 4 Co-Generating Unit 0 0 0 1 1 1 1 1 1 1 Total Units 2 2 4 5 5 5 5 5 5 5 Generating Capacity 147 mw 147 mw 175 mw 175 mw 175 mw 175 mw 175 mw 175 mw 175 mw 175 mw Co-Generating Capactiy 0 mw 0 mw 0 mw 175 mw 175 mw 175 mw 175 mw 175 mw 175 mw 175 mw Area of Service 74.8 sq. mi. 67.77 sq. mi. 67.77 sq. mi. 67.77 sq. mi. 68 sq. mi. 68 sq. mi. 68 sq. mi. 68 sq. mi. 68 sq. mi. 68 sq. mi. Substations 15 15 15 15 15 15.00 15.00 15.00 15 15 High Peak Load 162.87 mw 165.9 mw 158.5 mw 158 mw 164.162 mw 171 mw 172 mw 162.6 mw 164.082 mw 155.656 mw Customers: Residential 20,545 20,155 20,065 20,143 19,900 19,990 19,908 19,782 19,785 19,682 Commercial 3,577 3,424 3,310 3,343 3,412 3,412 3,354 3,386 3,370 3,497 Primary 36 37 37 36 37 37 39 38 36 37 69 KV Industrial 5 5 5 4 5 4 4 4 4 4 Municipal - Total number of meters 0 0 0 0 0 0 0 0 0 0 Total Customers Sales $ $80,295,500 $79,413,094 $76,657,592 $78,406,554 $78,187,300 $88,329,610 $91,947,980 $99,513,157 $98,081,648 $99,642,490 Total Customers Sales kWh 742,240,636 737,014,329 705,214,632 715,001,017 714,150,305 723,106,532 710,327,722 734,102,972 708,530,322 719,949,121 PowerSupply $ $48,147,500 $43,406,314 $42,292,251 $49,645,951 $57,003,103 $55,367,147 $58,758,032 $68,852,937 $72,508,956 $73,549,910 kWh 711,603,000 773,550,000 740,871,000 756,867,000 762,254,000 752,869,000 738,190,000 768,254,000 751,250,000 751,171,000 Fire Department: Stations 2 2 2 2 2 2 2 2 2 2 Officers 8 8 8 8 8 8 8 8 8 8 Firemen - Membership (Volunteers-Active) 125 125 125 125 160 100 100 100 120 80 Equipment 14 10 10 16 15 15 15 14 14 14 Parks and Recreation: Major Parks 3 3 3 3 3 3 3 3 3 3 Small Parks 25 25 24 24 24 24 24 22 22 22 (Continued) 181

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 22 Table 22 (Continued) June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 June 30, 2013 June 30, 2012 June 30, 2011 June 30, 2010 June 30, 2009 Police Department: Station 1 1 1 1 1 1 1 1 1 1 Uniformed Personnel 98 99 100 89 94 93 93 93 90 92 Automobiles 81 80 80 76 77 75 78 67 66 66 Motorcycles 7 7 7 7 7 7 7 7 7 7 Motor Boats 0 0 0 0 0 0 0 1 1 1 Bicycles 8 7 7 12 12 12 12 4 4 4 Specialty Vehicles 7 7 7 7 7 7 7 7 7 6 Trailers 4 3 2 2 2 2 2 3 3 3 Golf Carts 6 6 6 5 0 0 0 0 0 0 Public Library: Books 113,253 103,187 106,493 106,125 100,262 97,801 93,050 103,091 138,931 121,312 Audiovisual Materials (VCRs, DVDs, CDs, Cassettes, Recorded Books) 24,021 26,158 22,345 22,366 21,008 16,929 15,265 14,409 15,572 15,356 Members 32,256 40,412 41,221 41,348 37,531 34,308 32,717 33,466 36,534 39,354 Magazine Subscriptions 140 147 161 174 191 187 217 178 201 193 Newspapers 11 11 12 10 10 11 11 19 19 19 Circulation of Books 364,849 377,314 412,969 449,746 463,113 444,333 407,611 400,130 375,632 428,633 Electronic Downloads - Books 32,856 28,397 30,811 24,801 17,219 11,770 2,635 0 0 0 Water Utility: Supply - Wells 21 21 21 22 22 22 22 22 22 22 Storage Tanks 7 7 7 6 6 6 6 6 6 6 Total Storage Capacity (Gallons) 5,250,000 5,250,000 5,250,000 3,750,000 3,750,000 3,750,000 3,750,000 3,750,000 3,750,000 3,750,000 Water Mains (miles) 226 225 225 225 223 222 217.5 miles 215.7 miles 215.7 miles 215.7 miles Average Day (Gallons Pumped) 5,021,299 5,288,271 4,521,047 4,521,047 4,197,984 4,245,153 4,405,923 4,656,334 4,474,063 4,429,115 Peak Day (Gallons) 7,695,000 8,605,000 7,466,000 7,048,000 6,305,000 7,169,000 8,620,000 8,620,000 6,756,000 8,058,000 Total Water Production (Gallons Pumped) 1,832,774,000 1,930,219,000 1,833,877,000 1,650,329,000 1,532,264,000 1,553,727,000 1,608,161,895 1,699,562,000 1,633,033,000 1,616,627,000 Total Water Consumption (Gallons Billable) 1,692,407,000 1,766,064,000 1,648,819,000 1,441,559,000 1,374,855,000 1,410,424,000 1,459,923,000 1,539,590,000 1,466,943,000 1,531,526,000 Avearge Day (Gallons Billable) 4,636,732 4,838,531 4,517,312 3,949,476 3,766,726 3,864,175 3,988,861 4,218,055 4,019,022 4,195,962 Number of Metered Customers 12,729 12,556 12,376 12,365 12,341 12,373 12,385 12,330 13,863 13,375 Number of New Connections 173 180 11 24 0 0 55 0 488 146 Wastewater Utility: Pumping Stations 44 42 45 41 40 40 40 42 42 42 Sanitary Sewer Mains (Miles) 192.41 miles 191.00 miles 191.00 miles 191.00 miles 187.59 miles 186.87 miles 186.87 miles 185 miles 185 miles 185 miles Average Day (Gallons Pumped) 4,785,079 4,592,821 4, 706,133 4,897,731 4,893,424 4,312,742 4,379,033 4,230,819 5,385,060 4,220,493 Wastewater Discharge (Gallons Pumped) 1,746,554,000 1,676,379,600 1,717,738,575 1,787,672,000 1,786,100,000 1,574,151,000 1,602,726,000 1,544,249,000 1,965,547,000 1,540,480,000 Wastewater Discharge (Gallons Billable) 1,224,105,000 1,274,087,000 1,258,961,000 1,264,140,000 1,246,804,000 1,242,238,000 1,316,656,000 1,303,587,000 1,328,195,000 1,410,347,000 Average Day (Gallons Billable) 3,353,712 3,490,649 3,449,208 3,463,397 3,415,901 3,403,392 3,607,277 3,571,471 3,638,890 3,863,964 Number of New Connections 169 179 0 22 0 5 55 0 488 146 Water Treatment Plant: Capacity 4.6 MGD 4.6 MGD 4.6 MGD 4.6 MGD 4.6 MGD 4.6 MGD 4.6 MGD 4.6 MGD 4.6 MGD 4.6 MGD Sales to Customers: Water Fees $5,584,474 $5,776,109 $5,457,061 $4,889,046 $4,459,808 $4,551,840 $4,707,918 $4,945,385 $4,274,966 $4,070,523 Wastewater Fees $3,612,194 $3,718,736 $3,745,497 $3,735,855 $3,562,400 $3,564,615 $3,722,985 $3,694,020 $3,015,856 $2,351,885 Wastewater Treatment Fees $2,813,867 $2,912,660 $2,936,831 $2,952,857 $2,930,333 $2,926,616 $3,050,127 $3,058,656 $3,100,547 $3,733,644 Inflow & Infiltration Surcharge $1,800,156 $1,863,151 $1,878,057 $1,831,784 $1,316,209 $1,314,033 $1,290,968 $1,171,376 $0 $0 Sources: Various City departments 182

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 23 City of Dover, Delaware Summary of Insurance As of June 30, 2018 PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS Property Blanket Building & Contents (Special Form, RC, Agreed Amount) $159,477,841 $10,000 Deductible Personal Property of Others $ 250,000 Earthquake $2,000,000 $50,000 Deductible Flood Zones X or C $2,000,000 $50,000 Deductible Flood Zones (Zones unidentifiable) $100,000 Deductible Zones located A, B Shaded X, V & D are excluded Blanket Business Earnings & Expense $200,000 Business Income from Dependent Properties $250,000 Business Income from Dependent Properties Outside of Coverage Territory $100,000 Accounts Receivable $250,000 Civil Authority - 30 days Claims Data Expense $25,000 Covered Leasehold Interest $100,000 Debris Removal (Additional Amount) $250,000 Deferred Payments $25,000 EDP Data & Media Included Employee Tools ($2,500 item) $100,000 Expediting Expenses $250,000 Exhibitions (Property Damage) $50,000 Extra Expense $25,000 Fine Arts $250,000 Fire Dept Services Charge Included Fire Protective Equipment Discharge Included Fungus, Wet Rot, Bacteria $25,000 Furs, Fur Garments $25,000 Jewelry, gold, Silver, Platinum $25,000 Green Bldg Alternatives 1% / Max. $100,000 each building Green Bldg Reengineering & Recertification $25,000 Loss of Master Key $25,000 Newly Acquired or Constructed -Buildings Each $2,000,000 each building -Personal Property at each loc. $1,000,000 (Continued) 183

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 23 – Continued PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS Non-Owned Detached Trailers $25,000 Ord & Law Coverage A $250,000 Ord & Law Coverage B $250,000 Ord & Law Coverage D Included up to Extra Expense Limit Outdoor Property $250,000 Outside Signs –Described – Prem $100,000 Personal Effects $25,000 Personal Property at Undescribed Premises $50,000 Personal Property in Transit out of Coverage Territory $50,000 Pollution cleanup & removal $100,000 Preservation of Property-Direct $250,000 -Direct loss or damage to moved Prop. Included Reward Coverage $25,000 Stamps, Tickets and Letters of Credit $5,000 Stored Water $25,000 Theft or Damage to Rented Property Included Undamaged Parts of Stock in Process $50,000 Valuable Papers on Premises $100,000 Valuable Papers off Premises $100,000 Appurtenant Buildings and Structures $100,000 Overseas Business Travel Personal Property $25,000 Utility Service Direct Damage $50,000 Confiscated Property $100,000 Street Lights – Each Item $2,500 Street Lights – Per Occur $50,000 Street Signs – Each Item $2,500 Street Signs – Per Occur $50,000 Traffic Signs and Lights –Each $2,500 Traffic Signs and Lights - Per Occur $50,000 Stadium Lights – Each Item $2,500 Stadium Lights – Per Occur $50,000 Spoilage Coverage Extension $250,000 Sewer or Drain Backup $250,000 Boiler & Machinery Coverage Limit Property Limit Deductible $10,000 Expediting Expenses $250,000 Hazardous Substance $250,000 Spoilage $250,000 Ammonia Contamination $250,000 Inland Marine Contractors Equipment – Replacement Cost - 90% Co-Insurance Employee Tools $84,285 (Continued) 184

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 23 – Continued PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS Unlisted Items/equipment $100,000 Not to exceed $5,000 per item Leased or Rented Items $100,000 Not to exceed $100,000 per item New Acquired contractors equipment $250,000 Rental Cost (per Item) $5,000 Loss to any one Replacement Item $100,000 Basic Deductible $1,000 Employee Tool Deductible $250 Flood Deductible $50,000 Earth Movement Deductible $50,000 Windstorm Deductible Unscheduled $10,000 Windstorm Deductible Scheduled $1,000 Crime Employee Theft per Loss $500,000 $500 Deductible Forgery or Alteration $100,000 $1,000 Deductible Inside the Premises – Theft of Money & Securities $100,000 $500 Deductible Robbery or Safe Burglary of Other Property $100,000 $500 Deductible Outside the Premises $100,000 $500 Deductible Computer Fraud $100,000 $1,000 Deductible Money Orders & Counterfeit Currency $100,000 $1,000 Deductible Funds Transfers Fraud $100,000 $1,000 Deductible Faithful Performance of Duty Coverage Endorsement – Governmental Employees- $500,000 Liability Coverage: Commercial General Liability Each Occurrence Limit $1,000,000 General Aggregate Limit $3,000,000 Products Completed Operations Aggregate $3,000,000 Limit Personal & Advertising Injury Each Person $1,000,000 Damages to Premises Rented to You Limit (Any One Premises) $100,000 Medical Expenses $0 Sewer Back Up $1,000,000 (resulting from negligence) Failure to Supply $1,000,000 (Continued) 185

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 23 – Continued PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS Each Abuse or Molestation Offense Limit $1,000,000 Abuse or Molestation Aggregate Limit $2,000,000 Statutory Cap Limits of Coverage Endorsement Delaware Each Occurrence Statutory Cap Limit $300,000 Employee Benefit Plans Administration Liability - Claims Made Retroactive Date: None Aggregate Limit $3,000,000 Each Employee Limit $1,000,000 Deductible $1,000 Law Enforcement Liability - Occurrence Aggregate Limit $3,000,000 Each Wrongful Act Limit $1,000,000 Each Wrongful Act Deductible $15,000 Statutory Cap Limits of Insurance Endorsement Delaware Statutory Cap Limit $300,000 Public Entity Management Liability - Claims Made Retroactive Date: 7/1/1996 Aggregate Limit $3,000,000 Each Wrongful Act Limit $1,000,000 Deductible $25,000 Employment Practices Liability - Claims Made Retroactive Date: 7/1/1996 Aggregate Limit $2,000,000 Each Wrongful Employment Practice Offense Limit $1,000,000 Deductible $25,000 Business Auto Policy Coverage: Automobile Liability $1,000,000 Personal Injury Protection $300,000 Uninsured/Underinsured Motorist $40,000 (Physical Damage Applies to Police & Specified Electric & Sanitation Trucks) $1,000 Comp Ded/$1,000 Collision Ded Non-owned Liability $1,000,000 Hired Auto Liability $1,000,000 Employees as Additional Insured (Continued) 186

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 23 – Continued PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS Hired Auto Physical Damage Hired Car Physical Damage Deductibles Comprehensive Deductible $250 Collision Deductible $250 Statutory Cap Limits of Coverage Endorsement Delaware Statutory Cap Limit $300,000 Excess Crime Policy Coverage: Excess Crime Employee Theft per Loss $500,000 excess of $500,000 (Over Policy# 630OB165227) Umbrella Excess Liability Coverage: Umbrella General Aggregate Limit $6,000,000 Each Wrongful Act Limit $6,000,000 Each Wrongful Employment Practice Offense Limit $6,000,000 Products & Completed Work Aggregate Limit $6,000,000 Personal and Advertising Injury Any One Person or Organization Limit $6,000,000 Each Occurrence Limit $6,000,000 Retained Limit Any One Occurrence or Event $10,000 Umbrella Underlying Policies: General Liability $1,000,000 Employment Benefits $1,000,000 Auto Liability $1,000,000 Law Enforcement Liability $1,000,000 Public Entity Management $1,000,000 Employment Practices Liability Employers Liability (Safety Nat’l) $1,000,000 Cyber Liability Coverage: Cyber Liability – Claims Made CyberEdge Liability Limits – Aggregate Limits $1,000,000 (Continued) 187

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 23 – Continued PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS CyberEdge Security and Privacy Liability $1,000,000 Retention: $10,000  Retroactive Date: 12/1/2012 CyberEdge Cyber Media Liability $1,000,000 Retention: $10,000  Retroactive Date: 12/1/2016 CyberEdge Event Management Insurance $1,000,000 Retention: $10,000 CyberEdge Network Interruption Insurance $1,000,000 Retention: $10,000 CyberEdge Cyber Extortion Insurance $1,000,000 Retention: $10,000 CrisisFund $50,000 Pollution Liability Coverage: Pollution Liability Each Pollution Event Limit $5,000,000 Aggregate Policy Limit $10,000,000 Crisis Management Expense Aggregate Limit $50,000 Green Mediation Aggregate Limit $50,000 Green Standards Aggregate Limit $50,000 Deductibles $25,000 Each Pollution Event $100,000 Total For All Pollution Events Covered locations include: 2 Power Plants- McKee Run Generating Station and Van Sant Generating Station Claims Made Retroactive Date 4/1/1997 Includes: 2 Underground Storage Tanks-710 Williams St., Dover, DE -Each Pollution Event Limit (Storage Tank System) $1,000,000 -Aggregate Policy Limit (Storage Tank System) $1,000,000 -Each Pollution Event Claim Expense Limit $250,000 -Aggregate Claim Expense Limit $250,000 Excess Worker’s Compensation Coverage: Employers Liability Limit: $1,000,000 Specific Limit: Statutory Aggregate Excess Limit: $3,000,000 $600,000 Retention (Police) $500,000 Retention (All Other) Worker's Compensation-TPA Services (Continued) 188

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 23 – Continued PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS (Charges based on claim count, this number could fluctuate) Travel Accident Policy Principal Sum: $100,000 $0 Deductible Covered Positions: The Mayor, HR Director, Police Chief, Police Major, Police Captains, IT Director, PW Director, Waste/Wastewater Manager, PW Operations Manager, Electric Director, Engineering and Systems Operations, Line Crew Foreman, City Manager, Assistant City Manager, Planning Director, Principal Planner, Fire Marshall, City Clerk, Assistant City Clerk, Controller, Assistant Finance Director, Library Director, Assistant Library Director, Tax Assessor, Economic Development Director, and Council Members of the Policyholder. Bond-Self Insured Worker’s Compensation - State of Delaware Limit: $750,000 Bond – Public Officials Bond - Donna Mitchell – Treasurer Limit: $100,000 Bond- Public Officials Bond - Traci McDowell – City Clerk/Assistant Treasurer Limit: $100,000 Power Plants – Property & Boiler and Machinery (2 policies 50/50) Locations: McKee Run Generating Plant VanSant Station Policy #1 XL Insurance Company – $50,000,000 per Occurrence (50% Carrier Capacity Limit of $100,000,000) Coverages: 50% policy limit: $50,000,000 Per Occurrence Agreed Amount, Special Extra Expense: $2,000,000 Errors & Omissions $2,000,000 Expediting Cost: $1,000,000 Property in the Course of Construction: $5,000,000 Earthquake: $20,000,000 Flood: $10,000,000 Debris Removal $2,500,000 Property in Transit $2,500,000 Demolition & Increase Cost of Construction $10,000,000 Deductibles: $750,000 per Occurrence, except; $100,000 per Occurrence as respects Transit, (Continued) 189

2018 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 23 – Continued PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS In respect of Time Element loss (Extra Expense): 45 days per Occurrence, except; 72 hours per Occurrence in respect of Service Interruption Policy #2 Ace American Insurance Company – $50,000,000 per Occurrence (50% Carrier Capacity Limit of $100,000,000) Coverages: 50% policy limit: $50,000,000 Per Occurrence Agreed Amount, Special Extra Expense: $2,000,000 Errors & Omissions $2,000,000 Expediting Cost: $1,000,000 Property in the Course of Construction: $5,000,000 Earthquake: $20,000,000 Flood: $10,000,000 Debris Removal $2,500,000 Property in Transit $2,500,000 Demolition & Increase Cost of Construction $10,000,000 Deductibles: $750,000 per Occurrence, except; $100,000 per Occurrence as respects Transit, In respect of Time Element loss (Extra Expense): 45 days per Occurrence, except; 72 hours per Occurrence in respect of Service Interruption 190

CITY OF DOVER PROPOSED ORDINANCE #2019-02 1 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL 2 MET: 3 That Chapter 70 - Offenses and Miscellaneous Provisions, Section 70-7 - Registered Sexual Offenders of 4 the Dover Code be amended by deleting the text indicated in red strikeout and inserting the bold, blue text, 5 as follows: 6 Sec. 70-7. - Registered sexual offenders. 7 (a) Registration required. Sex offenders, as defined under the provisions of 11 Del. C., c. 41, § 8 4120A, shall register their places of residence and employment as required under the 9 provisions of 11 Del. C., c. 41, § 4120. 10 (b) Prohibition on residency and employments. 11 (1) Sex offenders assigned as Risk Assessment Tier II or Tier III under the provisions of 11 12 Del. C., c. 41, § 4120, shall be prohibited from residence or employment within 500 feet 13 of a day care center as defined in Appendix B-Zoning, Article 12-Definitions, of the 14 Dover Code. 15 (2) Any sex offender assigned as Risk Assessment Tier II or Tier III who maintained a 16 residence or was employed within 500 feet of a day care center on April 9, 2012, the date 17 of adoption of this section, shall be permitted to maintain that residence or employment. 18 Any subsequent change of residence or employment would be subject to the prohibitions 19 of section (b)(1). 20 (3) Any sex offender who is under 18 years of age and resides with a parent or legal guardian 21 shall be exempt from the provision of subsection (b)(1) of this section. 22 (c) Prohibition on rentals and leaseholds. 23 (1) It is unlawful for a property owner to knowingly and intentionally with actual knowledge 24 and after being made aware the person is a sexual offender let or rent any place, structure, 25 or part thereof, to a sexual offender, with the knowledge that it will be used as a 26 permanent or temporary residence, if such place, structure or part thereof, is located 27 within 500 feet of any day care center. In any prosecution for a violation of this section 28 it must be shown: 29 a. That the property owner knowingly and intentionally with actual knowledge and 30 after being made aware the person is a sexual offender let or rented the premises 31 to a person who was a registered sexual offender; and 32 b. The property owner had actual knowledge that the place, structure, or part thereof 33 would be used by the registered sexual offender as a permanent or temporary 34 residence of property located within the residential zoning classification. 35 Nothing herein shall be deemed to require the property owner to make any independent 36 determination whether the person is a sexual offender.

Proposed Ordinance #2019-02 - Chapter 70, Section 70-7 Page 2 37 (2) Exclusions. A sexual offender abiding, lodging, or residing in a permanent or temporary 38 residence within 500 feet of any day care center does not commit a violation of this 39 section provided the sexual offender is in full compliance with probation, parole, or 40 conditional release, and does not commit another sexual offense, and is in compliance 41 with the residency restrictions, if any of the following: 42 a. The sexual offender was a minor when committing the offense causing the 43 designation as a sexual offender and was not sentenced as an adult for that 44 offense. 45 b. The sexual offender is under the age of 18. 46 c. The day care center was opened or established after the sexual offender 47 established the permanent residence; and the residence was reported and 48 registered. 49 It is not the intent of this article to impair valid, existing and bona fide contract rights, 50 provided however that the provisions of this article shall apply upon final termination. 51 Extensions or renewals of any leasehold relationship is prohibited. When a person who 52 is the subject of this article changes residences, this article shall fully apply to such 53 persons. 54 (d) Measurement of distance. For purposes of measuring separation of a residence from a day care 55 center, all distances shall be measured from the entrances and exits of the residence or place 56 of employment running in a direct line to the outermost entrances and exits of the day care 57 center. 58 (e b) Prohibited activities for sexual offenders. 59 (1) It is unlawful for any sexual offender to participate in a holiday event or practice 60 involving children under 18 years of age, such as distributing candy or other items to 61 children on Valentine's Day, Halloween, Christmas, or any other holiday or event. 62 Participation is to be defined as attendance at, or taking part of, or cooperation with an 63 event. 64 (2) It is unlawful for any sexual offender to wear costumes for the primary purpose of 65 entertaining, attracting, or encouraging interaction with children. 66 (3) Any person designated a sexual offender shall be required on October thirty-first of each 67 year or any other day upon which Halloween is celebrated to: 68 a. Avoid all Halloween related contact with children; 69 b. Post a sign at his/her residence stating, "No candy or treats at this residence." Such 70 signs shall be in letters at least two inches high and shall be legible from the street 71 or road adjacent to the residence; 72 c. Except for lighting provided on a year round basis by a sexual offender or the owner 73 or manager of a multi-family residential unit for the purpose of security or walkway 74 or hallway illumination, all outside residential lighting shall be off during the evening

Proposed Ordinance #2019-02 - Chapter 70, Section 70-7 Page 3 75 hours after 5:00 p.m., and no exterior holiday decorations shall be exhibited on the 76 sexual offender's residence or on the property upon which the residence is located. 77 (4) Holiday events or practices in which the sexual offender is the parent or guardian of the 78 child or children involved, and where no non-familial children are present, are exempt 79 from this section. 80 (f) Penalties. Any person who violates this section shall be fined in accordance with Appendix 81 F-Fees and Fines, section 70-7. Every day that a violation occurs shall constitute a separate 82 offense. 83 (Ord. No. 2012-08, 4-9-2012; Ord. No. 2013-08, 7-8-2013) 84 ADOPTED: * 85 S:\ORDINANCES\2019\DRAFT\ORDINANCE #2019-02-CHPT 70-OFFENSES AND MISCELLANEOUS PROVISIONS\Ordinance #2019-02-Chpt 70-Offenses, Sec. 70-7-Registered sexual offenders.wpd 86 SYNOPSIS 87 The amendment will bring the Dover Code into compliance with recently adopted State legislation. 88 (SPONSORS: HARE AND MCDOWELL) 89 Actions History 90 01/14/2019 - Introduction - Council Committee of the Whole/Legislative, Finance, and Administration Committee

SPONSOR: Rep. J. Johnson & Sen. Ennis Reps. Baumbach, Kowalko HOUSE OF REPRESENTATIVES 149th GENERAL ASSEMBLY HOUSE BILL NO. 357 AN ACT TO AMEND TITLE 22 OF THE DELAWARE CODE RELATING TO MUNICIPALITIES. BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE: 1 Section 1. Amend Chapter 1, Title 22 of the Delaware Code by making deletions as shown by strike through and 2 insertions as shown by underline as follows and redesignating accordingly: 3 § 117. Limitation on residency and location restrictions for sex offenders. 4 No municipality of this State shall enact or enforce any law, ordinance, or regulation prohibiting or restricting the 5 residency or movements of persons deemed to be a sex offender pursuant to § 4121 of Title 11 that is more restrictive than 6 the requirements imposed by § 1112 of Title 11. SYNOPSIS The Department of Corrections sometimes has difficulty tracking sex offenders coming out of prison because overly restrictive local ordinances can severely restrict the availability of appropriate housing. Homeless sex offenders are less likely to comply with registration requirements and are less able to access required treatment and comply with other supervision conditions. This may contribute to recidivism and detract from public safety. This bill restricts the power of municipalities to impose broader residency and proximity restrictions on sex offenders than those that apply under state law. Specifically, 11 Del. C. 112, prohibits sex offenders from residing or loitering within 500 feet of school property. Page 1 of 1 HD : NSW : TEH Released: 03/27/2018 12:32 PM 1031490373