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REGULAR COUNCIL MEETING The Regular Council Meeting was held on May 29, 2012 at 7:30 p.m. with Council President Leary presiding. Council members present were Mr. Anderson, Mrs. Russell, Mr. Lynn, Mr. Perza, Mr. Bonar, Mrs. Williams, Mr. Hare, and Mr. Hutchison. Council staff members present were Police Chief Hosfelt, Ms. Russell, Mrs. Mitchell, Mrs. Townshend, Captain Mark Hall, Mr. Koenig, City Solicitor Rodriguez, and Mrs. McDowell. Mayor Carey was also present. OPEN FORUM The Open Forum was held at 7:15 p.m., prior to commencement of the Official Council Meeting. Council President Leary declared the Open Forum in session and reminded those present that Council was not in official session and could not take formal action. Mr. James Long, 323, Columbia Avenue, stated he wished to speak regarding the proposed increase in employee health care premiums considered by the Council Committee of the Whole earlier in the evening. He explained that, as a retired Naval Officer, he felt that leaders should not ask others to do things that they do not demonstrate that they are capable of doing themselves. He encouraged the Mayor and Council to lead through personal sacrifice. Mr. Long stated that if everyone sat together, “a give-up” could be found to lay on the table as a demonstration of faith. Ms. Christina Kober, 343 Orchard Road Drive, Camden, stated that she wished to provide additional information regarding the proposed 15% health care premium cost-sharing arrangement considered by the Council Committee of the Whole during their meeting held earlier in the evening. She explained that the State of Delaware’s health care plan includes vision and dental insurance and that State employees were afforded the opportunity to prepare for health care cost-sharing for a period of 18 months before implementation. Ms. Kober read a letter dated May 29, 2012 from a number of City of Dover non-bargaining employees regarding health care cost-sharing into the record (Exhibit #1). The invocation was given by Councilwoman Sophia Russell, followed by the Pledge of Allegiance. AGENDA ADDITIONS/DELETIONS Mr. Hutchison moved for approval of the agenda, as presented, seconded by Mr. Bonar and unanimously carried. Mr. Bonar moved for approval of the Consent Agenda, seconded by Mr. Lynn and carried by a unanimous roll call vote. ADOPTION OF MINUTES - ANNUAL COUNCIL MEETING OF MAY 14, 2012 The Minutes of the Annual Council Meeting of May 14, 2012 were unanimously approved by motion of Mr. Bonar, seconded by Mr. Lynn and bore the written approval of Mayor Carey.

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 2 CERTIFICATE OF CONGRATULATIONS - SCHWARTZ CENTER FOR THE ARTS 10TH ANNIVERSARY The City Clerk read the following Certificate of Congratulations into the record: Certificate of Congratulations presented to Schwartz Center for the Arts in celebration of providing quality arts education programs and activities for our children, youth and adults in the Dover community for 10 successful years. The City of Dover extends its congratulations on this special milestone. We wish you many more years of success. Presented May 29, 2012 Mayor Carey presented the Certificate to Sandra Conner, Executive Director of the Schwartz Center. RECOGNITION OF SERVICE - BOBBY C. JONES - LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE (SEPTEMBER 2006 - MAY 2012) On behalf of members of Council, Mayor Carey presented Dr. Bobby Jones with a Dover Cup in recognition of her service on the Legislative, Finance, and Administration Committee from September 2006 to May 2012. Dr. Jones thanked members for the opportunity to serve and to learn. RESOLUTION NO. 2012-10 COMMEMORATING MEMORIAL DAY The City Clerk read a proposed Resolution commemorating Memorial Day. By motion of Mr. Hare, seconded by Mr. Anderson, Council, by a unanimous roll call vote, adopted Resolution No. 2012-10, as follows: WHEREAS, On May 5, 1868, General John A. Logan, Commander-in-Chief of the Grand Army of the Republic, called for an annual day of remembrance on May 30th for the purpose of strewing flowers, or otherwise decorating the graves of Comrades who died in the defense of their country. Logan believed that this was the proudest act of his life and it remains his greatest legacy; and WHEREAS, in honor of our fallen service members, Congress, by a joint resolution approved May 11, 1950, requested that the President issue a proclamation calling on the people of the United States to observe each Memorial Day as a day of prayer for permanent peace and designating a period on that day when the people of the United States might unite in prayer; and WHEREAS, Memorial Day became a federal holiday when Congress passed the National Holiday Act of 1971, which also moved the holiday from May 30th to the last Monday in May, and in May 2000, President William J. Clinton signed a resolution calling for a National Moment of Remembrance on Memorial Day which urges all Americans to pause for one minute at 3:00 p.m. (local time) on Memorial Day, to remember and reflect on sacrifices made by so many to provide freedom for all; and

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 3 WHEREAS, we gratefully acknowledge that we live in freedom today because of the many sacrifices that have been made and continue to be made by the courageous servicemen and women on behalf of our great Nation and we remember Dover residents who gave the ultimate sacrifice: Ralph Bennett, George Bullock, and Ralph Patterson - World War II; Toby Collins, George Cripps, Harold Haddick, Donald Kenton, Ray Nolan, and Edwin Sornson - Vietnam; Travis Griffin and Jarrett Thompson - Operation Iraqi Freedom; and WHEREAS, on this solemn day in which Americans unite in remembrance of our country's fallen, we also pray for our military personnel and their families, our veterans, and all who have lost loved ones. As a grateful Nation, we forever carry the selfless sacrifice of our fallen heroes in our hearts, and we share the task of caring for those they left behind. NOW, THEREFORE, BE IT RESOLVED that the Mayor and Council call upon the citizens of the City of Dover, Delaware to observe Memorial Day by appropriately honoring the generations of Americans who have fought and died in pursuit of peace and liberty around the world and to pause and reflect on the magnitude of past sacrifices made by our servicemen and women and their families, and the continuing service that members of our Armed Forces valiantly provide to defend our freedom. ADOPTED: MAY 29, 2012 PRESENTATION - DELAWARE STATE UNIVERSITY CONVOCATION CENTER Dr. Harry Williams provided a PowerPoint presentation (Exhibit #2) detailing the University’s activities, accomplishments, and future plans, including an early college high school and a convocation center. Mr. Hutchison thanked Dr. Williams for the University’s commitment, vision, and focus. PRESENTATION - BURNS AND MCDONNELL ELECTRIC COST OF SERVICE STUDY AND RATE ANALYSIS Mr. Ted Kelly, Principal with Burns & McDonnell, provided a PowerPoint presentation of the Electric Cost of Service Study and Rate Adjustment Considerations (Exhibit #3). He noted that the rate study process involves three (3) steps, as follows: 1) Financial Forecast to determine if the rates are adequate to provide the revenue requirements, 2) Cost of Service Analysis to determine if the various customer class rates are producing the revenues by class to address their costs, and 3) Rates design to address overall revenue recovery by the different classes of customers. Responding to Mr. Anderson, Mr. Kelly stated that the advantage of focusing on rates instead of power adjustments is that rates are aligned with costs. In some cases, power adjustments increase to the point of being a larger component of the bill than the bill itself. Mr. Kelly suggested making periodic adjustments to the base. Mr. Kelly stated that City of Dover rates were becoming more competitive with surrounding states. Mr. Leary noted receipt of correspondence from Mr. James Long, 323 Columbia Avenue, opposing the proposed feasibility study regarding the sale of the power plant (Exhibit #4).

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 4 APPEAL OF REVOCATION OF LICENSE - TOWNE DOLLAR & TOBACCO, LLC On March 21, 2012, the City of Dover issued a notice of summary action and revoked the City of Dover business license for Towne Dollar and Tobacco, LLC, also known as the Tobacco Hot Spot. This action was taken in accordance with Dover Code, Chapter 26 - Businesses, Section 26-64 - Summary Action, in response to a seizure by the Dover Police Department of 471 doses of purported “bath salts” and 450 packages of purported synthetic marijuana that were available for sale at Towne Dollar and Tobacco, LLC. The Department of Planning and Inspections held a Provisional Hearing on March 26, 2012, with regard to the revocation of the business license. At this hearing, each side presented testimony with regard to the legality of the substances seized. Based on the available evidence and the testimony presented at the hearing, Mrs. Ann Marie Townshend, Director of Planning and Community Development, determined that the business sold substances prohibited by State law and municipal ordinance and upheld the revocation of the business license. In accordance with the provisions of Dover Code, Chapter 26 - Businesses, Section 26-65 - Appeals, the business owner has appealed this revocation to City Council. The business owner also filed a motion in Chancery Court for a temporary restraining order and preliminary injunction. This motion was denied in a decision issued May 17, 2012, giving deference to the administrative appeal process and upcoming hearing scheduled before City Council. On May 25, 2012, Mrs. Townshend received a request from Sandra D. Osman (Casey) (Exhibit #5) to postpone the May 29, 2012 hearing in order for her attorney to request two (2) samples of the Pure to obtain an independent analysis and report. Basil C. Kollias, Esq. of Cooch and Taylor, P.A., representing Towne Dollar and Tobacco, LLC, provided materials relevant to the case (Exhibit #6). Mr. Kollias stated that, according to Section 26-59 of the Dover Code, a provisional order should have been issued and his client should have been provided five (5) days to comply with the order and been given the opportunity to request a hearing on the provisional order. Instead, the business was determined to be a nuisance and the business license was revoked in accordance with Section 26-64 of the Dover Code. Mr. Kollias advised members that his clients have been operating in Dover for over 10 (ten) years without any issues, the last seven (7) years at this location. The owners and the employees of Towne Dollar and Tobacco, LLC have yet to be convicted. They have been arrested based on a probable cause based on a certain field testing done by the Dover Police using Nark ® II. Mr. Kollias stated that Nark ® II only has the capability of presumptively identifying suspected substances, meaning that, at best, it is only sufficient to show probable cause but cannot be used to prove guilt. He noted that a field test does not prove that the employees or owners of Towne Dollar and Tobacco, LLC were guilty of selling bath salts. Mr. Kollias noted that the excerpt of the hearing minutes indicated that the Police officer was new to performing this test and the test had only been in use for a month or less and this was the first time it was used for this specific substance. He stated that the field test specified that the compound tested positive for MDPV. Mr. Kollias stated that Towne Dollar has provided the City with several analyses of this and other compounds that have been confiscated by the police. Each and every

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 5 analysis was tested for a series of compounds that specifically are listed as bath salts under the State of Delaware regulations. Each and every compound shows that no bath salts were detected. Mr. Kollias noted that the Dover Code lists (1) Methylone; (2) MDPV; (3) Methylenedioxypyrovalerone; (4) Methylmethcathinone; (5) Mephedrone; (6) Methoxymethcathinone; and (7) Fluromethcathinone as dangerous substances and the analyses provided by Towne Dollar and Tobacco, LLC showed that the compounds tested negative for each of these substances. Mr. Kollias advised members that the State police, during the raid on March 21st, confiscated all of the suspected bath salts and they sent samples to the Medical Examiner’s Office, per procedure, and asked for a report as to what the compounds contained as they tested them for the bath salts. He noted that the preliminary report indicated only a single substance detected, that being called Pentedrone, which is not one (1) of the seven (7) compounds listed in the City of Dover’s Ordinance. Mr. Kollias stated that they summarized all seven (7) compounds listed, including their chemical formula, to compare to Pentedrone. Not one of the compounds, isomers, salts, or isomer salts matched Pentedrone. He advised members that the same comparison was made with the 21 compounds listed in the State of Delaware Uniform Controlled Substances Act with the same result. Mr. Kollias stated that the reason that the revocation of the license was upheld during the last hearing was because the City of Dover did not believe his client’s analyses and wanted to test on their own. He stated that the preliminary report of the City’s testing listed only one (1) compound found and that compound was not on the regulated list and it is not a bath salt. Mr. Kollias reiterated that his clients have been in business ten years in Dover, they have been good citizens, they have provided jobs and service to the area, and they have proven without a doubt that they were not selling bath salts nor any other regulated substance. Mr. Kollias stated that, according to the Dover Code, a provisional order should have been given with five (5) days to comply; the provisional order should have been something akin to allowing them to stay in business but not allowing them to sell the suspect substances until it was determined whether or not they were legal or illegal. He noted that Towne Dollar and Tobacco, LLC has been out of business since March 21, 2012, which is two (2) months and a week. They have lost substantial revenue, they are losing their business, and there is a very strong chance of losing their lease, all for not doing anything that is illegal. City Solicitor Nicholas Rodriguez noted that this was an appeal hearing and the appellant had requested a continuance. Responding, Mr. Kollias stated that the continuance was requested in order to obtain a duplicate sample from the City of Dover Police in order to run their own analysis; however, based on the testing results provided by the City which conclusively show that there are none of the regulated substances, his client has decided that they should move forward. Mr. Rodriguez advised that this was an appeal from decision hearing and it would be up to City Council to make a determination tonight based upon Vice Chancellor Noble’s decision that they had not exhausted their demonstrated remedies in the Court of Chancery and the hearing would go forward.

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 6 Mrs. Townshend stated that on March 21, 2012, she was contacted by the Dover Police Department as they were executing a search warrant and seized a substantial amount of what they believed to be bath salts. Due to the quantity of what was reported at the time and what was confiscated included over 450 containers of what were believed to be bath salts, she consulted with the Deputy City Solicitor and they moved to the Summary Action, which is an emergency provision used when the behavior of the business rises to the level of being a nuisance. Mrs. Townshend reminded members that City Council enacted an emergency ordinance to address the concerns with bath salts after significant problems were identified related to violent crimes and the side effects being experienced by the users. She stated that, due to the egregious nature shared of what was shared by the Police Department, they needed to act quickly. The Department of Planning and Inspections issued a notice of Summary Action in accordance with Dover Code Chapter 26 – Businesses, Section 26-64 – Summary Action. The Department of Planning and Inspections held an administrative hearing on Monday, March 26, 2012, with regard to the revocation of the business license and the business owner and the Dover Police Department presented testimony. Mrs. Townshend stated that some of the papers submitted by the business owner were inconclusive. There were partial reports from Tulane Drug Analysis Laboratory that indicated that the substance called “Jacked Rabbit” was negative for the prohibited substances and that the results for “Yayo” and Pure were inconclusive. Mrs. Townshend stated that, during the Administrative Hearing, it was contended that the compound was not bath salts because when bath salts were being sold they were specifically labeled “not for human consumption” and the products that they were selling were labeled as energy supplements. She stated that examination of the evidence revealed that the “Jacked Rabbit” and “Yayo” were labeled as energy supplements and the product called Pure had a label that said “not for human consumption.” Mrs. Townshend noted that there were 200 containers that were labeled “not for human consumption.” Mrs. Townshend stated that it became clear in her correspondence with Tulane Drug Analysis Laboratory that they tested a sample; however, it could not be determined by batch or lot number that it was a sample of the product being sold. It was Mrs. Townshend’s belief that all of the evidence was turned over to the Medical Examiner’s Office, which is the crime lab for the State. The initial Medical Examiner’s report indicated that one (1) exhibit of the Pure brand tested positive for Pentedrone, a synthetic Cathinone (bath salts) that is a controlled substance in Delaware. Mrs. Townshend stated that the inconsistency in the testimony, the labeling of the product, the testimony of the Police Department, and the inability to obtain conclusive lab reports influenced her decision to stand by the revocation of the business license. Responding to Mrs. Williams, Mr. Rodriguez stated that the field testing done by the Police Department and the evidence from the Medical Examiner’s Office both tested positive for the dangerous substance. Mrs. Townshend noted that the Medical Examiner’s report is only referred to as preliminary because they have not yet tested all of the samples.

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 7 Responding to Mr. Perza, Mr. Rodriguez stated that, according to Vice Chancellor Noble’s decision, “The standard which the City must satisfy in code-enforcement cases such as this is not probable cause. It also is not the criminal standard of beyond a reasonable doubt. The administrative process anticipates something akin to a preponderance of the evidence.” Mr. Rodriguez stated that, based upon the request for a continuance, neither he nor the Police Chief were prepared to move forward with the hearing. Mr. Hare asked how bath salts would be obtained in a store, noting that Sgt. Pires testimony indicated that the bath salts were not on display for sale, they were actually tucked behind the counter in a box. Mr. Kollias stated that it was a false statement and that they had video and a still photograph showing the clerk taking the substance that was purchased (not bath salts) out of a glass display case (container) just beside the register. He also noted that they were able to show the video of the entire purchase at Chancery Court and it showed that between the time the police came and made that purchase, went out, and they came in and raided the store during the period that they did this field test a total of two (2) minutes and eight seconds had passed. Police Chief James Hosfelt stated that the Nark ® II test is the same test they use for marijuana, cocaine, heroin, etc., although it is specific to bath salts. The illegal drugs are sent to the Medical Examiner’s Office and they test a random sampling of that drug, which is sufficient and recognized by all of the courts in the State. Chief Hosfelt stated that it is usually a year-long process for the Medical Examiner to test, but the initial testing of the drug shows that it is, in fact, bath salts. He noted that the drug in question was hidden behind the counter and was marked “not for human consumption.” Chief Hosfelt expressed concern that Towne Dollar and Tobacco, LLC had requested that the appeal hearing be continued this evening and that the hearing was moving forward without the benefit of having the officers and detectives available to provide testimony. He also asked, in regard to the independent lab samples, where Mr. Kollias obtained the samples that were tested. Mr. Kollias responded that the sample was requested from the distributor, who sent a sample from the bulk container to the AIBioTech laboratory. He stated that the distributor buys the material in bulk and he splits it himself into the containers that are available for retail sale and then ships them out and there are no batch numbers or lot numbers. Mr. Kollias stated that, provided with each shipment is an analysis done by the manufacturer that is provided to the distributor. He noted that they were unsuccessful in reaching the manufacturer to obtain permission for Tulane to release all of the analyses to them and the City of Dover. Responding to Chief Hosfelt, Mr. Kollias stated that he did not know if AIBioTech was recognized by the State of Delaware as an expert in field testing or testing. He indicated that he did not know if they were recognized by the State of Delaware; however, they are licensed in their state. Mr. Kollias pointed out that Mr. Rodriguez referred to Pentedrone as a controlled substance; however, it was not included on the list. Mr. Bonar stated that they had to decide whether or not the administrative staff has taken the proper precautions to protect the public from what they genuinely felt was a positive field test executed in the normal course of events through an investigation by the Police Department. He noted that their probable cause was enough to convince a judge that they had a right to go in there and execute a

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 8 search warrant. The preliminary field test tested positive for some of these controlled substances and the field test is just a preliminary examination and their duty was to determine if staff was acting in good conscience in protecting the general public from what was initially determined to be an illegal substance. Mr. Bonar felt that the revocation should be upheld until there is a full and complete examination of the chemical substances that are involved in all of the packages that were submitted as evidence, as long as the chain of evidence was complied with and there was probable cause to execute the search warrant. Mrs. Williams and Mr. Hare concurred with Mr. Bonar’s statements. Responding to Mr. Lynn, Mr. Kollias stated that when the laws were initially enacted by the State of Delaware, his client contacted the State to determine which of the substances they had for sale were illegal and which were not. Once it was determined that some were illegal, they returned the merchandise to the distributor. He stated that his client has no direct knowledge of the manufacture of the substance; however, they require the distributor to provide with every shipment an analysis of the compound verifying that it is legal. Mr. Lynn asked who provided the Tulane reports. Mr. Kollias stated that they were provided by the manufacturer to the distributor, who provided copies with the shipment. He stated that it was represented to his client as a test of the actual product that was delivered. Mrs. Williams moved to reaffirm the action taken by the Planning Department and the Police, seconded by Mr. Perza and carried by a roll call vote of eight (8) yes, one (1) no (Mr. Anderson). VIOLATION OF DANGEROUS BUILDING ORDINANCE - PROPERTY LOCATED AT 26 NORTH KIRKWOOD STREET, OWNED BY JOE BURDEN (TABLED AT COUNCIL FOR 60 DAYS ON MARCH 12, 2012) Mr. Hare moved to lift the matter from the table. The motion was seconded by Mrs. Williams and failed by a roll call vote of one (1) yes, seven (7) no, and one absent (Mr. Lynn). COUNCIL COMMITTEE OF THE WHOLE REPORT - MAY 29, 2012 The Council Committee of the Whole met on May 29, 2012 with Council President Leary presiding. (City Clerk’s Office Note: Except for the following time sensitive issue, the Committee’s report from their May 29, 2012 meeting will be presented to Council during the Regular Council Meeting of June 11, 2012 for review and consideration.) Review and Recommendation - Filling of Critical Positions Motor Equipment Operator (MEO) II - Sanitation Mr. Scott Koenig, City Manager, reviewed a request to fill a Motor Equipment Operator (MEO) II position in the Sanitation Division. He noted that this Division was previously staffed at 13 positions and has had up to three (3) vacancies throughout the year. Mr. Koenig estimated the budgetary impact of the position at $45,604 including wages and benefits and indicated that this amount was allocated in the draft FY 2012-2013 budget. In response to Mr. Hare, Mr. Koenig stated that the position had been vacant for approximately six (6) months. He explained that there were currently three (3) vacant positions in the Division; one

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 9 (1) was eliminated from the draft budget, one was proposed to be filled with a temporary employee, and staff was requesting to fill the third position. He indicated that it has been necessary to “backfill” this position with labor from the Grounds or Streets Divisions, which has reduced productivity in those areas. Responding to Mr. Bonar, Mr. Koenig stated that if the position were not filled, staff from the Grounds or Streets Divisions would continue to be depleted and would have to “limp through” operations. In response to Mr. Hare, Mr. Koenig indicated that catch basin cleaning, additional street sweeping, repainting of center skip lines, and numerous other tasks could be performed if the Department were fully staffed. Mr. Bonar moved for approval of the request to fill the Motor Equipment Operator (MEO) II - Sanitation position for discussion purposes seconded by Mr. Hutchison. In response to Mr. Bonar, Mr. Koenig stated that if the position were not filled, the City would likely incur overtime expenses and the level of trash collection service would be reduced; however, the resulting overtime expenses incurred by the Sanitation Division would not exceed the amount of money budgeted for the position. Responding to Mr. Bonar, Mr. Koenig indicated that the incumbent of this position would drive City vehicles because a temporary employee cannot perform this function. He felt that failing to fill the position would hamper staff’s ability to get vehicles to the locations necessary for trash pick-up and would also interfere with the Streets Division’s ability to perform services such as street patching and concrete work due to understaffing. The Committee recommended approval of the request to fill the Motor Equipment Operator (MEO) II - Sanitation position. Mr. Bonar moved for approval of the Committee’s recommendation, seconded by Mr. Hutchison and carried by a unanimous roll call vote. Utility Maintenance Mechanic (UMM) I - Wastewater Mr. Scott Koenig, City Manager, reviewed a request to fill a Utility Maintenance Mechanic (UMM) I - Wastewater position. He advised members that the incumbent of the position would perform routine maintenance on approximately 40 pump stations throughout the City, including small residential and large industrial areas. Mr. Koenig stated that there were currently six (6) positions budgeted for the Wastewater utility, two (2) of which were vacant, and noted that one (1) of these positions would be discussed subsequently during the meeting. He projected an estimated impact of $49,391 on the draft FY 2012-2013 budget for wages and benefits. Mr. Koenig stated that if staff falls behind on the pump station maintenance, the City would experience mechanical problems and incur contractual expenses for repairs that would be greater than the amount proposed to fund the position. He noted that a proposal has been negotiated in the amount of approximately $1,300 per day with Smith and Loveless, Inc., to provide emergency services if needed. Mr. Koenig felt that if City workers were available in-house to work on the utility, they would become familiar with the

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 10 equipment and the premium payment for standby services would not be necessary. He stated that, in staff’s opinion, it was an absolute necessity to have mechanics on staff. Responding to Mr. Hare, Mr. Koenig explained that a UMM II is more experienced than a UMM I and has more technical knowledge. He stated that a number of former Air Force mechanics have previously been hired as UMMs and Water Treatment Plant Operators. He noted that staff attempts to partner a UMM I with a UMM II on each crew to allow the Level II workers to train the Level I workers and to provide job progression. He explained that the goal was to have three (3) such crews available. The Committee recommended approval of the request to fill the position of Utility Maintenance Mechanic (UMM) I - Wastewater, as recommended by staff. Mr. Bonar moved for approval of the Committee’s recommendation, seconded by Mr. Anderson and carried by a roll call vote of eight (8) yes and one (1) no (Mr. Hutchison). Water Plant Operator I - Water Treatment Plant Mr. Scott Koenig, City Manager, reviewed a request to fill a Water Plant Operator I vacancy in the Water Treatment Plant that was created by an employee retirement effective March 29, 2012. He projected an estimated impact of $50,351 on the draft FY 2012-2013 budget. Mr. Koenig noted that the position was a key component of the water production function of the City’s Water utility and the incumbent would take an active part in the management and maintenance of seven (7) shallow wells at the Long Point Road Treatment Plant, 15 deep wells and associated micro-treatment plants that accompany those wells, as well as play a role in the active maintenance and operation of elevated storage tanks throughout the City. He indicated that the employee would be expected to become a State-certified water system operator, which involves a number of regulatory requirements, mandatory ongoing training, and maintenance of institutional knowledge and skills required of water treatment personnel. Mr. Koenig stated that staff deemed this position critical to the long-term use of the City’s water utility. He reminded members that if the City’s project with Calpine goes through as expected, demand will increase on the City’s water system in the future and he felt that personnel must be prepared to handle these projected demands. The Committee recommended approval of the request to fill the position of Water Plant Operator I, as recommended by staff. Mr. Bonar moved for approval of the Committee’s recommendation, seconded by Mr. Anderson and carried by a roll call vote of eight (8) yes and one (1) no (Mr. Hutchison). Patrolman (3) Police Department Chief James Hosfelt reviewed a request to fill three (3) projected Patrolman vacancies which will be created by the planned retirement of three (3) officers, with the first retirement scheduled for June 22, 2012. He stated that the request would create a slight impact on the FY 12 budget; however, the requests were submitted at this time to allow for attendance at the upcoming Police Academy scheduled to begin on June 18, 2012. Chief Hosfelt explained that another Academy would not be scheduled for at at least one (1) year, which would cause a lag of 1½ to two (2) years before the officers hired could assume their duties. He stated that two (2) officers had submitted

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 11 their retirement paperwork and the third individual was a sergeant who must retire on or before September 13, 2012 due to the Department’s age/years of service mandatory retirement policy, as stated in Dover Police Department Procedural Notice 22 - Compensation, Benefits, and Conditions of Work. He noted that filling these positions would bring the force to 93 officers which is the authorized strength of the Department; however, after the expected retirement in September, the force would reduce to 92. Responding to Mr. Leary, Chief Hosfelt stated that following the June 2012 Police Academy, the next Academy (run by the Delaware State Police) will be held in March 2013 and the officers trained at that time would not be able to assume full duties until one (1) year after graduation. In response to Mr. Bonar, Chief Hosfelt stated that five (5) agencies in Delaware are authorized to hold Police Academies (one of which is the City of Dover); however, due to a lack of manpower, time, and financial resources, currently only the City of Wilmington, New Castle County, and the Delaware State Police are scheduling such training. Responding to Mr. Bonar, Chief Hosfelt stated that he did not anticipate any additional officers to retire in the near future. In response to Mr. Hutchison, Chief Hosfelt explained that, although the Police sergeant who was expected to retire did not wish to retire at his current age of 52, City policy requires officers to retire after attaining age 55 or 30 years of service, whichever occurs first. He stated that the State law which granted the City the authority to set this policy had been in effect “for decades” and that staff saw no reason to change this requirement. He indicated that the State law had previously been challenged at both the State and County levels and was upheld. Mr. Hutchison stated that he was deeply concerned that an individual with many years of service with the City was being forced to retire rather than being afforded the opportunity to remain with the Department for three (3) additional years until attaining age 55, noting that, in his opinion, this officer was in “as good shape” as anyone in the Police Department. Chief Hosfelt did not feel that it was appropriate to discuss the details of this matter at the current time and offered to speak further with Mr. Hutchison on this topic outside Council Chambers. Responding to Mr. Hare, Chief Hosfelt stated that, to his knowledge, no City officer has previously returned to such employment as a temporary employee following retirement and he was not aware of any mechanism in place to provide for this option. In addition, he noted that temporary employment would not allow the officer to add to his pension. In response to Mr. Bonar, Chief Hosfelt stated that he had previously researched the possibility of having a Police retiree perform responsibilities related to the Red Light Enforcement Program and potentially the Speed Enforcement Program (if implemented) on a contract basis; however, Justice of the Peace Court No. 7 would not recognize such a position as a civilian function. He noted that the employee in this position is responsible for not only reviewing camera data but also testifying in Court 7 in connection with individuals who contest violations. Chief Hosfelt advised members that consideration has been given to hiring a retired officer to maintain certification and this option

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 12 was being explored. He noted that a desk sergeant was currently administering the Red Light Enforcement Program and this individual’s job responsibilities also involve overseeing the master corporal in the motorcycle unit. Responding to Mr. Anderson, Chief Hosfelt explained that new police officers hired by the City Police Department cannot exceed 34 years in age since they must have 20 years of service in order to be eligible to retire with full benefits. In response to Mr. Hare, Chief Hosfelt stated that the retirement age and service requirements for City police officers are a matter of City policy. He stated that at some point the effectiveness of law enforcement officers must be examined, and he felt that working night shifts and “wrestling” with offenders day after day was “too much to ask” of officers who have attained age 55 or 30 years of service. In addition, he stated that the Department assigns individuals to the Police Department based upon “what they can best do for us” and felt that the particular officer involved had been best suited to serve as a platoon sergeant. Responding to Mr. Hutchison, Chief Hosfelt stated it was his understanding that the other two (2) retiring officers planned to request a lump sum payment when they retire. In addition, he indicated that the mandatory retirement requirements were listed in the Police Department rules and regulations and had been in place for 10-15 years. To his knowledge, this was the first employee who has had difficulty with this policy. Chief Hosfelt stated that he had discussed the matter with the employee, the City Solicitor, and other sources (including attorneys) to ensure that the law was valid and the employee had been kept abreast of these discussions. He stated that he believed that the City’s position on the matter was “on solid footing.” The Committee recommended approval of the request to fill the three (3) Patrolman positions, as recommended by staff. Mr. Bonar moved for approval of the Committee’s recommendation, seconded by Mr. Anderson and carried by a roll call vote of eight (8) yes and one (1) no (Mr. Hutchison). Utility Maintenance Mechanic (UMM) II - Wastewater Mr. Scott Koenig, City Manager, reviewed a request to fill a Utility Maintenance Mechanic (UMM) II - Wastewater vacancy which was created during the previous two (2) weeks due to the transfer of an employee from the Wastewater crew to the Electric Department. He requested Council’s approval to advertise the position externally and estimated the impact of wages and benefits on the draft FY 2012-2013 budget at $74,888. Responding to Mr. Hare, Mr. Koenig explained that the UMM position that was considered earlier in the meeting was a UMM I. He stated that when wages and benefits are estimated, full wages and family health care coverage rates are used to project the highest potential budgetary impact. He explained that, although he considered this position critical, the employee who formerly occupied the position transferred to a recently vacated position in the Electric Department that was deemed equally important.

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 13 In response to Mr. Perza, Mr. Koenig stated that positions of this nature are required by Code to work in pairs due to the necessity of working in confined spaces (wet wells). He confirmed that the City is seeking to hire a Level II employee in order to match the individual with a Level I employee. The Committee recommended approval of the request to fill the position of Utility Maintenance Mechanic (UMM) II - Wastewater. Mr. Bonar moved for approval of the Committee’s recommendation, seconded by Mr. Anderson and carried by a roll call vote of eight (8) yes and one (1) no (Mr. Hutchison). Responding to Mr. Lynn regarding the absence of a request to fill critical positions at the Library as an agenda item, Mr. Koenig stated that some Library positions were approved by Council on April 9, 2012 when a “first wave” of positions was brought forth for consideration, and a Library Clerk position would likely be considered at one of the next several Council meetings. Mr. Koenig explained that the number of hours to be worked by part-time employees was a matter of discussion during current labor negotiations and would affect the filling of Library Page positions. He expressed his hope that another “wave” of positions would be brought forth in the near future. Mr. Koenig stated that he believed that these vacancies could be filled in time for the scheduled Library opening, noting that that a temporary Certificate of Occupancy for the facility would be issued in July 2012. He did not feel that a long training time would be required for the Library Page positions; however, he indicated that the Clerk position would require a longer timeline. Mr. Koenig confirmed that finding the administrative time to process the large volume of applications would present some challenges. Review of Grant Application - City Hall Generator (DEMA) Mr. Scott Koenig, City Manager, advised members that the City requested and received funding from the State Homeland Security Grant Program (SHSGP) for the purchase and installation of an emergency generator at City Hall. He stated that the total amount required for the generator would not exceed the grant total of $93,000 and that staff was currently in the bidding process for this piece of equipment. Mr. Koenig indicated that funding for this project was available under short notice to the City due to the failure of other municipalities in the State to complete their projects by the due date set forth by the federal government. All costs associated with the project would be charged to the Facilities Management budget and 100% of the project costs would be reimbursed to the City upon application for reimbursement. Mr. Koenig noted that the estimated yearly operating costs would be $1,800 (50 hours x nine (9) gallons per hour x $4.00 per gallon) and the annual maintenance Cost was estimated at $400 to $500. He advised members that this opportunity was the result of the Mayor's efforts to secure these funds for the City of Dover. Staff requested authorization to complete the project and request reimbursement for the costs associated with the City Hall generator not to exceed the allotted $93,000. The Committee recommended that staff be granted authorization to complete the project and request reimbursement for the costs associated with the purchase and installation of the emergency City Hall generator, not to exceed $93,000. Mr. Hare moved for approval of the Committee’s recommendation, seconded by Mr. Hutchison and carried by a unanimous roll call vote.

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 14 Mr. Bonar moved for acceptance of the report, seconded by Mr. Hare and unanimously carried. SET PUBLIC HEARING - ELECTRIC FUND BUDGET (RECOMMENDED THAT A PUBLIC HEARING BE SET FOR JUNE 11, 2012 AT 7:30 P.M.) A public hearing on the Electric Revenue Fund Budget is required for compliance with the 1985 Electric Revenue (Refunding) Bonds Resolution - Annual Budget Section (as amended by 1990 Bond Resolution) prior to adoption of the budget. Staff recommended that the public hearing be set for June 11, 2012 at 7:30 p.m. Mr. Bonar moved to set a public hearing for June 11, 2012 at 7:30 p.m. for the 2012/2013 City of Dover Electric Fund Budget, seconded by Mr. Hare and unanimously carried. EVALUATION OF BIDS - INFLOW AND INFILTRATION (I&I) SANITARY SEWER REHABILITATION PROJECT Wastewater Management includes the Inflow/Infiltration Removal capital project to correct areas in the sanitary sewer collection system that are deteriorating and allowing groundwater to enter the sanitary sewer system through cracked pipes and/or through poorly sealed joints. Eliminating infiltration into the City's sanitary sewer mains will result in reduced pumping and treatment costs. Issues identified within the wastewater system are to be addressed through the Inflow / Infiltration CIP. During FY 11/12, a Sanitary Sewer Inflow & Infiltration Study was conducted in the following areas of the City of Dover, New Street, Reed Street, Morris Estates, and Fox Hall. These areas were identified by staff to be examined due to the high level of groundwater identified entering the system as well as the level of deterioration of pipes in this part of the system. The study included staff cleaning and performing video inspections of roughly 3,113 linear feet of sanitary sewer main and 82 manholes. The survey information was submitted to a consultant to review and provide recommendations. The result of the recommendations was to replace approximately 2,135 linear feet of sanitary sewer main, install three (3) additional manholes and replace twenty-one (21) existing manholes. The bid package was advertised by the City's Contract and Procurement Manager under Bid #12-0036WW and was opened on May 16, 2012. The following three(3) contractors submitted bids for the proposed project. CONTRACTOR LOCATION AMOUNT OF BID Eastern States Construction Wilmington, DE $976,505.00 Services, Inc. JJID, Inc. Bear, DE $2,245,795.00 Teal Construction, Inc. Dover, DE $748,00.00 City staff reviewed the Teal Construction, Inc. bid package and found it free of math errors and/or discrepancies. In addition, staff has reviewed the contractor's qualification information, which included a list of recently completed projects similar in material scope to the sanitary sewer replacement project and their financial statement and found all information to be adequate. The low bid represents fair market value; and their qualifications are in accordance with the requirements of this project.

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 15 Staff recommended approval of the low bid submitted by Teal Construction, Inc. in the amount of $748,000 for the installation of approximately 2,135 linear feet of 8" sanitary sewer main; installation of three (3) new manholes and replacement of 21 existing manholes. The work will be accomplished in New Street, Reed Street, Morris Estates, and Fox Hall. Mr. Hare moved for approval of staff’s recommendation, seconded by Mrs. Williams and carried by a unanimous roll call vote. SCHEDULING OF PREVIOUSLY CANCELLED JUNE 25, 2012 CITY COUNCIL MEETING Council President Leary reminded members that, during the Council Meeting of February 27, 2012, the Committee and Council meetings falling in the week of the fourth Monday of every third month (March, June, September, and December) were cancelled to provide additional time for day-to-day operations for those departments that were short-staffed due to the hiring freeze. He advised members that, in order to conclude the budget process, it would be necessary to reschedule the Council Meeting of June 25, 2012. Mrs. Williams moved to reschedule the previously cancelled June 25, 2012 City Council meeting, seconded by Mr. Anderson and unanimously carried. DISCUSSION - STAFF MEMBERS REQUIRED TO ATTEND CITY COUNCIL MEETINGS At the request of Mr. Hutchison, members considered excusing the Fire Chief and the Tax Assessor from regular attendance at the City Council meetings. Speaking on behalf of Fire Chief Fortney, Captain Mark Hall, stated that the Fire Department would like to retain their seat at the Council meetings in order to stay informed. Responding to Mr. Lynn, Mrs. Townshend, Director of Planning and Community Development, stated that it is often helpful to have the Fire Department available for Violation of Dangerous Building hearings. Mr. Bonar suggested that the Fire Chief and Tax Assessor could be requested to attend when matters involving them were on the agenda. Mr. Hutchison moved to excuse the Fire Chief and City Assessor from regular attendance at the City Council meetings. The motion was seconded by Mr. Hare and failed by a roll call vote of five (5) no, four (4) yes (Mr. Bonar, Mrs. Williams, Mr. Hutchison, and Mr. Leary). Mr. Hare moved to excuse the City Assessor from regular attendance at the City Council meetings, seconded by Mrs. Williams and unanimously carried. Mr. Hutchison moved that the City Manager move to lower tier of the dias, seconded by Mr. Bonar and carried with Mr. Perza voting present.

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 16 APPOINTMENT - RECOMMENDED BY COUNCIL PRESIDENT LEARY - CHAPLAIN WALLACE DIXON - CITY CHAPLAIN (ANNUAL APPOINTMENT EXPIRES JUNE 2013) By consent agenda, Mr. Bonar moved for approval of the reappointment of Chaplain Wallace Dixon to serve as the City Chaplain for a term to expire June 2013, as recommended by Council President Leary. The motion was seconded by Mr. Lynn and carried by a unanimous roll call vote. COUNCIL PRESIDENT APPOINTMENTS - 2012/2013 COMMITTEES (ANNUAL APPOINTMENTS DEFERRED DURING THE MEETING OF MAY 14, 2012) By consent agenda, Mr. Bonar moved for approval of the Committee Appointments for 2012/2013, as recommended by Council President Leary. The motion was seconded by Mr. Lynn and by a unanimous roll call vote, the following appointments were made: Legislative, Finance, and Administration Committee Sean M. Lynn, Chair David L. Anderson William F. Hare Daniel Shevock (Civilian Member) Michael G. Rushe (Civilian Member Appointed by Committee Chair) Parks, Recreation, and Community Enhancement Committee Sophia R. Russell, Chair David L. Anderson David L. Bonar Ann Baker Horsey (Civilian Member) David A. Lewis, Jr. (Civilian Member Appointed by Committee Chair) Safety Advisory and Transportation Committee James L. Hutchison, Sr., Chair Adam M. Perza Sophia R. Russell John J. Davis (Civilian Member) Thomas J. Keller, Jr. (Civilian Member Appointed by Committee Chair) Utility Committee David L. Bonar, Chair Adam M. Perza Beverly C. Williams Richard Snaman (Civilian Member) Lester L. Blakeman, Sr. (Civilian Member Appointed by Committee Chair) Construction Code Board of Appeals David L. Anderson, Chair Adam M. Perza

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 17 Other Post-Employment Benefits (OPEB) Trust Fund Board William F. Hare, Chair Beverly C. Williams Retirement Committee - General Employee Pension Plan David L. Bonar Sean M. Lynn Retirement Committee - Police Pension Plan David L. Bonar Sean M. Lynn COUNCIL PRESIDENT APPOINTMENTS - 2012/2013 MISCELLANEOUS (ANNUAL APPOINTMENTS DEFERRED DURING THE MEETING OF MAY 14, 2012) By consent agenda, Mr. Bonar moved for approval of the Miscellaneous Committee Appointments for 2012/2013, as recommended by Council President Leary. The motion was seconded by Mr. Lynn and, by a unanimous roll call vote, the following appointments were made: Chamber of Commerce & Greater Dover Committee Liaison Members Carleton E. Carey, Sr. James L. Hutchison, Sr. City/County Committee (Liaison to Kent County) David L. Bonar Carleton E. Carey, Sr., Mayor William F. Hare Scott D. Koenig, City Manager Thomas J. Leary, Council President Beverly C. Williams Kent County Tourism Sophia R. Russell Kent Economic Partnership James L. Hutchison, Sr. COUNCIL MEMBERS ANNOUNCEMENTS There were no Council Member Announcements. Mrs. Williams moved for adjournment, seconded by Mr. Bonar and unanimously carried.

CITY COUNCIL MEETING OF MAY 29, 2012 PAGE 18 Meeting Adjourned at 9:23 P.M. TRACI A. McDOWELL CITY CLERK All orders, ordinances, and resolutions adopted by City Council during their Regular Meeting of May 29, 2012 are hereby approved. CARLETON E. CAREY, SR. MAYOR /TM S:\ClerksOffice\Agendas&Minutes\Council-Minutes\2005\08-22-2005 Council.wpd Exhibits Attached to Original Minutes and File Copy Exhibit #1 - Letter Dated May 29, 2012 from City of Dover Non-Bargaining Employees Regarding Health Care Cost- sharing Exhibit #2 - PowerPoint Presentation - Delaware State University Exhibit #3 - PowerPoint Presentation - Electric Cost of Service Study and Rate Adjustment Considerations Exhibit #4 - Correspondence from Mr. James Long Opposing Feasibility Study - Sale of the Power Plant Exhibit #5 - Request from Sandra D. Osman (Casey) to Postpone Towne Dollar and Tobacco, LLC Hearing Exhibit #6 - Material Provided by Basil C. Kollias, Esq. - Towne Dollar and Tobacco, LLC

EXHIBIT #1 Council Meeting of 05/29/2012

EXHIBIT #2 Regular Council Meeting of 05/29/2012 EXHIBIT #2 President’s Presentation to the City Council May 29, 2012 Regular Council Meeting of 05/29/2012

Delaware State University is a public, comprehensive, 1890 land- grant institution that offers access and opportunity to diverse populations from Delaware, the nation, and the world. Building on its heritage as a historically black college, the University purposefully integrates the highest standards of excellence in teaching, research, and service in its baccalaureate, master’s and doctoral programs. Its commitment to advance science, technology, liberal arts, and the professions produces capable and productive leaders who contribute to the sustainability and economic development of the global community.

2011 - 2012 Priority Areas  STEM  Retention and Graduation  Health and Wellness

R E C O R D

DSU New Freshman Students by Residency Fall 2004 - Fall 2011 In-State Out-of-State 1,200 Year 1 Year 1 Year 1 1,000 Year 1 800 653 590 600 604 584 506 494 619 512 400 200 433 350 302 253 244 187 218 251 0 2004 2005 2006 2007 2008 2009 2010 2011

FEATURING THE COMMUNITY SERVICE OF DSU INSPIRE SCHOLARS March 31 City of Wilmington: Peoples Settlement New Castle County: Food Bank of Delaware Kent County: Central Delaware Habitat for Humanity Sussex County: Western Sussex Boys and Girls Club

Over 250 participants!

Sunday, April 1, 2012

DSU New Freshman Retention Rates Fall 2005 - Fall 2010 Cohorts 80.0% 70.0% Retention Rate 60.0% 50.0% 2005 2006 2007 2008 2009 2010 Retention Rate 63% 64% 58% 66% 67% 70%

Aspire Scholars

Barclays Bank Mentor Program

International Partnerships  Vietnam National University—44 MBA students  Chinese partnerships and DSU exchanges  MOU with National School for Ag Training and Ext. of Mauritania  New agreement with Korea

Visit DSU’s new Wellness and Recreation Center (Memberships available!)

DSU is home of FIRST-EVER PUBLIC RADIO STATION • Broadcasting starts this summer • Audience 800,000+ • Educational opportunities “From the campus of Delaware State University……”

FIRST-EVER KENT COUNTY SCIENCE FAIR

DSU GOES TO MARS!  STEM Making our mark on Mars…

Timeline • Onsite design charrette completed • Schematic design late May • City of Dover Development advisory Committee in June • Vibration testing ongoing • Geotechnical soil borings ongoing • Site survey being completed

• Facilities Master Planning • Seeking $250,000 grant for planning grant for Convocation Center UNDERWAY!

Convocation • Commencement • Major events Center • Area hub • Athletics • Revenue generator • Academics: public and allied health, sport management, physical education, Delaware Center for Health Promotions • Job generator

EXHIBIT #3 Regular Council Meeting of 05/29/2012 Electric Cost of Service Study and Rate Adjustment Considerations EXHIBIT #3 Presented to the City of Dover, Delaware May 29, 2012 Regular Council Meeting of 05/29/2012

Agenda • Need for Adjustments • Financial Planning • Cost of Service Considerations • Potential Rate Adjustments • Typical Bill Comparisons 2

Need for Rate Adjustments • Current Rates Implemented July 1, 2008 • Updated Financial Forecast • Purchased Power Costs Updated • System Growth Relatively Flat 3

Key Assumptions • No Customer Growth • No Projected Energy Sales Growth: • Projected Expenses Reflect: – Purchased Power Expenses • Down 13 Percent Since FY 2008 Rate Adjustment – Total Electric Operating Expenses • Down 6.5 Percent Since FY 2008 Rate Adjustment 4

Financial Planning 5

Financial Planning Operating Revenue at Current Rates (w/PPA) 110,000 100,000 90,000 80,000 Residential 70,000 Small Commercial Medium Commercial 60,000 - $1000 - Large Commercial Primary 50,000 Transmission Lighting 40,000 Utility Tax Miscellaneous Receipts 30,000 Revenue Level w/o PPA 20,000 10,000 - 2012 2013 2014 2015 Budget Projected Projected Projected 6

Financial Planning Operating Expense Summary 100,000 90,000 80,000 70,000 60,000 - $1000 - 50,000 Power Supply and Generation Operating Expenses City Transfer 40,000 30,000 20,000 10,000 - 2012 2013 2014 2015 Budget Projected Projected Projected 7

Projected Net Margins - No Adjustments Budget Projected Projected Projected 2012 2013 2014 2015 Revenue from Electric Sales - Current Rates $ 96,672,000 $ 96,672,000 $ 96,672,000 $ 96,672,000 Operating Revenue - Purchased Power Adjustment (6,012,000) (8,217,100) (14,984,200) (16,917,600) Operating Revenue - Utility Tax 1,700,000 1,658,700 1,531,800 1,495,500 Operating Revenue - Miscellaneous Receipts 1,509,603 1,204,700 1,204,700 1,204,700 Total Operating Revenue $ 93,869,603 $ 91,318,300 $ 84,424,300 $ 82,454,600 Power Supply & Generation $ (64,722,838) $ (62,935,100) $ (55,994,400) $ (53,728,100) Operating Expenses (15,231,039) (13,429,500) (13,296,500) (13,586,800) Operating Transfers - Out (General Fund) (7,876,288) (8,000,000) (8,000,000) (8,000,000) Operating Margin $ 6,039,438 $ 6,953,700 $ 7,133,400 $ 7,139,700 Non-Oper. Rev. - Interest on Operating $ 149,000 $ 148,500 $ 120,900 $ 109,600 Non-Oper. Rev. - Interest on Reserves 408,300 466,000 475,200 472,600 Margins Available For Debt Service $ 6,596,738 $ 7,568,200 $ 7,729,500 $ 7,721,900 Interest for Long-Term Debt (1,260,100) (1,205,600) (1,131,900) (1,037,000) Cash From Operations $ 5,336,638 $ 6,362,600 $ 6,597,600 $ 6,684,900 Transfer from Rate Stabilization Reserve $ 1,000,000 $ - $ 400,000 $ 350,000 Debt Issue Cost Amort.- 2004 Bonds (12,700) (12,700) (12,700) (12,700) Debt Issue Cost Amort.- 2008 Bonds (8,900) (8,900) (8,900) (8,900) Depreciation Expense (4,813,600) (4,978,400) (5,152,500) (5,333,800) Net Margins $ 1,501,438 $ 1,362,600 $ 1,823,500 $ 1,679,500 Debt Service Coverage Margins Available for Debt Service $ 6,596,738 $ 7,568,200 $ 7,729,500 $ 7,721,900 Total Debt Service 3,320,100 3,315,600 3,301,900 3,297,000 Debt Service Coverage Ratio 1.99 2.28 2.34 2.34 8

Financial Forecast • Reviewed Results for Three Year Period • Financial Targets: – Debt Service Coverage Requirements – Maintain Positive Net Margins • Determined Revenue Adjustments – FY 2013 – 12.0 percent – FY 2014 – 4.25 percent – FY 2015 – 2.25 percent • Reset PPA to Zero 9

Projected Net Margins - With Adjustments Budget Projected Projected Projected 2012 2013 2014 2015 Revenue from Electric Sales - Current Rates $ 96,672,000 $ 96,672,000 $ 96,672,000 $ 96,672,000 Proposed Adjustment in FY 2013 at -12.00% - (11,600,600) (11,600,600) (11,600,600) Proposed Adjustment in FY 2014 at -4.25% - - (3,615,500) (3,615,500) Proposed Adjustment in FY 2015 at -2.25% - - - (1,832,800) Operating Revenue - Purchased Power Adjustment (6,012,000) - - - Operating Revenue - Utility Tax 1,700,000 1,595,200 1,527,400 1,493,000 Operating Revenue - Miscellaneous Receipts 1,509,603 1,204,700 1,204,700 1,204,700 Total Operating Revenue $ 93,869,603 $ 87,871,300 $ 84,188,000 $ 82,320,800 Power Supply & Generation $ (64,722,838) $ (62,935,100) $ (55,994,400) $ (53,728,100) Operating Expenses (15,231,039) (13,366,000) (13,292,100) (13,584,300) Operating Transfers - Out (General Fund) (7,876,288) (8,000,000) (8,000,000) (8,000,000) Operating Margin $ 6,039,438 $ 3,570,200 $ 6,901,500 $ 7,008,400 Non-Oper. Rev. - Interest on Operating $ 149,000 $ 148,500 $ 120,900 $ 109,600 Non-Oper. Rev. - Interest on Reserves 408,300 466,000 394,200 377,700 Margins Available For Debt Service $ 6,596,738 $ 4,184,700 $ 7,416,600 $ 7,495,700 Interest for Long-Term Debt (1,260,100) (1,205,600) (1,131,900) (1,037,000) Cash From Operations $ 5,336,638 $ 2,979,100 $ 6,284,700 $ 6,458,700 Transfer from Rate Stabilization Reserve $ 1,000,000 $ 5,400,000 $ 1,250,000 $ 500,000 Debt Issue Cost Amort.- 2004 Bonds (12,700) (12,700) (12,700) (12,700) Debt Issue Cost Amort.- 2008 Bonds (8,900) (8,900) (8,900) (8,900) Depreciation Expense (4,813,600) (4,978,400) (5,152,500) (5,333,800) Net Margins $ 1,501,438 $ 3,379,100 $ 2,360,600 $ 1,603,300 Debt Service Coverage Margins Available for Debt Service $ 6,596,738 $ 4,184,700 $ 7,416,600 $ 7,495,700 Total Debt Service 3,320,100 3,315,600 3,301,900 3,297,000 Debt Service Coverage Ratio 1.99 1.26 2.25 2.27 10

Cost-of-Service Analysis • Unbundled Revenue Requirements – Power Supply (Demand & Energy) – Transmission – Distribution – Customer • Assigned Costs to Classes – Allocation Factors • Summarized Results 11

Cost of Service Summary Test Period 2013 Cost of Service Summary Small Medium Large Total System Residential Commercial Commercial Commercial Primary Transmission Lighting Energy Cost ¢/kWh 6.73 6.81 6.81 6.81 6.81 6.64 6.52 6.81 Demand Cost $/kW-mo 19.02 20.51 20.51 20.25 20.25 16.71 14.77 - Customer Cost $/Customer-mo 4.67 5.17 6.25 8.31 10.34 15.51 20.68 2.58 Net Revenue Requirement $ 85,071,400 $ 26,694,583 $ 3,026,836 $ 5,678,086 $ 21,030,477 $ 15,431,576 $ 12,043,050 $ 1,166,793 Revenue at Current Rates 96,672,000 29,254,800 3,526,900 6,602,900 23,782,200 17,804,000 14,375,300 1,325,900 Dollar Difference $ (11,600,600) $ (2,560,217) $ (500,064) $ (924,814) $ (2,751,723) $ (2,372,424) $ (2,332,250) $ (159,107) Cost of Service Adjustment -12.00% -8.75% -14.18% -14.01% -11.57% -13.33% -16.22% -12.00% 12

Indicated Adjustments to Rates Small Medium Large Total System Residential Commercial Commercial Commercial Primary Transmission Lighting -12.00% -8.75% -14.18% -14.01% -11.57% -13.33% -16.22% -12.00% Note: This is adjustment to electric rates. A portion of this decrease is offset by resetting the PPA to zero. 13

Rate Design Analysis • Need to Address Revenue Over Collection • Rate Implementation Strategy – Adjust Rate Revenue -12.0 Percent July 1 – Reset Purchased Power Adjustment – Consider Cost of Service Results – Generate Adequate Revenues – Meet City’s Policies and Objectives – Incorporate Direction Provided 14

Proposed Electric Rates Customer Class Customer Charge Energy Charge Demand Charge ($/month) ($/kWh) ($/kW-month) Residential 5.00 0.1316 - Small Commercial Single Phase 5.00 0.1176 - Small Commercial Three Phase 15.00 0.1176 - Medium Commercial Single Phase 5.00 0.0758 15.70 Medium Commerical Three Phase 15.00 0.0758 15.70 Large Commercial * 15.00 0.0758 15.70 Primary * 10.00 0.0754 11.25 Transmission * - 0.0727 10.50 * Large Commercial, Primary and Transmission customer classes have power factor adjustments. 15

Typical Bill Comparisons

Residential Current Proposed Units Billing FY 2013 Billing Adjustment Adjustment Monthly Energy - kWh - 817 817 Customer Charge -$- $ 5.00 $ 5.00 $ - 0.00% Energy Charges -$- $ 118.47 $ 107.52 $ (10.95) -9.24% Subtotal - Base Rates $ 123.47 $ 112.52 $ (10.95) -8.87% Purchased Power Adjustment -$- $ (7.00) $ - $ 7.00 -100.00% Green Energy Fund Charges -$- $ 0.15 $ 0.15 $ - 0.00% Total Bill $ 116.61 $ 112.66 $ (3.95) -3.38% [1] Average customer monthly energy for the test period. 17

Sample Bill – Small Commercial (1 Phase) Current Proposed Units Billing FY 2013 Billing Adjustment Adjustment Monthly Energy - kWh - 765 765 Customer Charge -$- $ 5.00 $ 5.00 $ - 0.00% Energy Charges -$- $ 112.07 $ 89.96 $ (22.11) -19.73% Subtotal - Base Rates $ 117.07 $ 94.96 $ (22.11) -18.88% Purchased Power Adjustment -$- $ (6.56) $ - $ 6.56 -100.00% Green Energy Fund Charges -$- $ 0.14 $ 0.14 $ - 0.00% Utility Tax -$- $ 4.70 $ 4.04 $ (0.66) -14.06% Total Bill $ 115.36 $ 99.14 $ (16.21) -14.06% [1] Average customer monthly energy for the test period. 18

Sample Bill – Small Commercial (3 Phase) Current Proposed Units Billing FY 2013 Billing Adjustment Adjustment Monthly Energy - kWh - 1,216 1,216 Customer Charge -$- $ 15.00 $ 15.00 $ - 0.00% Energy Charges -$- $ 178.14 $ 143.00 $ (35.14) -19.73% Subtotal - Base Rates $ 193.14 $ 158.00 $ (35.14) -18.19% Purchased Power Adjustment -$- $ (10.42) $ - $ 10.42 -100.00% Green Energy Fund Charges -$- $ 0.22 $ 0.22 $ - 0.00% Utility Tax -$- $ 7.77 $ 6.72 $ (1.05) -13.51% Total Bill $ 190.71 $ 164.94 $ (25.77) -13.51% [1] Average customer monthly energy for the test period. 19

Sample Bill – Med. Commercial (1 Phase) Current Proposed Units Billing FY 2013 Billing Adjustment Adjustment Monthly Energy - kWh - 5,171 5,171 Monthly Billing Demand - kW - 19 19 Customer Charge -$- $ 5.00 $ 5.00 $ - 0.00% Energy Charges -$- $ 473.15 $ 391.96 $ (81.18) -17.16% Demand Charges -$- $ 298.30 $ 298.30 $ - 0.00% Subtotal - Base Rates $ 776.45 $ 695.26 $ (81.18) -10.46% Purchased Power Adjustment -$- $ (44.32) $ - $ 44.32 -100.00% Green Energy Fund Charges -$- $ 0.92 $ 0.92 $ - 0.00% Utility Tax -$- $ 31.15 $ 29.59 $ (1.57) -5.03% Total Bill $ 764.21 $ 725.77 $ (38.44) -5.03% [1] Average customer monthly energy and demand for the test period. 20

Sample Bill – Med. Commercial (3 Phase) Current Proposed Units Billing FY 2013 Billing Adjustment Adjustment Monthly Energy - kWh - 6,609 6,609 Monthly Billing Demand - kW - 23 23 Customer Charge -$- $ 15.00 $ 15.00 $ - 0.00% Energy Charges -$- $ 604.72 $ 500.96 $ (103.76) -17.16% Demand Charges -$- $ 361.10 $ 361.10 $ - 0.00% Subtotal - Base Rates $ 980.82 $ 877.06 $ (103.76) -10.58% $ - $ - $ - 0.00% Purchased Power Adjustment -$- $ (56.64) $ - $ 56.64 -100.00% Green Energy Fund Charges -$- $ 1.18 $ 1.18 $ - 0.00% Utility Tax -$- $ 39.33 $ 37.33 $ (2.00) -5.09% Total Bill $ 964.69 $ 915.56 $ (49.12) -5.09% [1] Average customer monthly energy and demand for the test period. 21

Sample Bill – Large Commercial Current Proposed Units Billing FY 2013 Billing Adjustment Adjustment Monthly Energy - kWh - 31,264 31,264 Monthly Billing Demand - kW - 91 91 Customer Charge -$- $ 15.00 $ 15.00 $ - 0.00% Energy Charges -$- $ 2,860.66 $ 2,369.81 $ (490.84) -17.16% Demand Charges -$- $ 1,428.70 $ 1,428.70 $ - 0.00% Subtotal - Base Rates $ 4,304.36 $ 3,813.51 $ (490.84) -11.40% Purchased Power Adjustment -$- $ (267.93) $ - $ 267.93 -100.00% Green Energy Fund Charges -$- $ 5.56 $ 5.56 $ - 0.00% Utility Tax -$- $ 171.78 $ 162.31 $ (9.47) -5.51% Total Bill $ 4,213.77 $ 3,981.39 $ (232.39) -5.51% [1] Average customer monthly energy and demand for the test period. [2] Power factor adjustment not included in calculations. 22

Sample Bill – Primary Current Proposed Units Billing FY 2013 Billing Adjustment Adjustment Monthly Energy - kWh - 325,398 325,398 Monthly Billing Demand - kW - 820 820 Customer Charge -$- $ 10.00 $ 10.00 $ - 0.00% Energy Charges -$- $ 29,123.12 $ 24,535.01 $ (4,588.11) -15.75% Demand Charges -$- $ 9,225.00 $ 9,225.00 $ - 0.00% Subtotal - Base Rates $ 38,358.12 $ 33,770.01 $ (4,588.11) -11.96% Purchased Power Adjustment -$- $ (2,788.66) $ - $ 2,788.66 -100.00% Green Energy Fund Charges -$- $ 57.92 $ 57.92 $ - 0.00% Utility Tax -$- $ 712.55 $ 676.56 $ (35.99) -5.05% Total Bill $ 36,339.93 $ 34,504.49 $ (1,835.44) -5.05% [1] Average customer monthly energy and demand for the test period. [2] Power factor adjustment not included in calculations. 23

Sample Bill - Transmission Current Proposed Units Billing FY 2013 Billing Adjustment Adjustment Monthly Energy - kWh - 2,679,753 2,679,753 Monthly Billing Demand - kW - 5,116 5,116 Customer Charge -$- $ - $ - $ - 0.00% Energy Charges -$- $ 234,478.39 $ 194,818.04 $ (39,660.34) -16.91% Demand Charges -$- $ 53,718.00 $ 53,718.00 $ - 0.00% Subtotal - Base Rates $ 288,196.39 $ 248,536.04 $ (39,660.34) -13.76% Purchased Power Adjustment -$- $ (22,965.48) $ - $ 22,965.48 -100.00% Green Energy Fund Charges -$- $ 477.00 $ 477.00 $ - 0.00% Utility Tax -$- $ 5,314.16 $ 4,980.26 $ (333.90) -6.28% Total Bill $ 271,022.06 $ 253,993.30 $ (17,028.76) -6.28% [1] Average customer monthly energy and demand for the test period. [2] Power factor adjustment not included in calculations. 24

Electric Cost of Service Study and Rate Adjustment Considerations Discussion and Questions

EXHIBIT #4 Regular Council Meeting of 05/29/2012 McDowell, Traci From: Devine, Denise Sent: Friday, May 25, 2012 10:16 AM Cc: Koenig, Scott; Mitchell, Donna; City Clerks Office Subject: FW: Correspondence relating to Central Delaware Chamber of Commerce support for a politically motivated study and "corporate welfare" for one or more of its members. Attachments: Ltr to CDCC - 9 May.docx; E-mail to John Still - CDCC board member.docx; Ltr to CDCC - 21 May - reply to Diogo ltr of 11 May.docx; Diogo reply to my 9 May e-mail ltr.pdf Please see the email from Mr. James Long below. Printed copies of Mr. Long’s email and attached correspondence will be placed on member’s desks Tuesday night, for consideration with Item #5B. Burns and McDonnell Electric Cost of Service Study and Rate Analysis. Thank you, Denise L. Devine Assistant City Clerk City of Dover e‐mail: ddevine@dover.de.us (302) 736‐7008 phone (302) 736‐5068 fax From: J.P. Long [mailto:jpl61@verizon.net] Sent: Thursday, May 24, 2012 12:09 PM To: City Clerks Office Cc: Dover Post: Hayes Subject: Correspondence relating to Central Delaware Chamber of Commerce support for a politically motivated study and "corporate welfare" for one or more of its members. May 24, 2012 To the Mayor and Council, Attached are four pieces of correspondence I have recently exchanged with the officers and board members of the Central Delaware Chamber of Commerce (CDCC), asking that they withdraw both their request for a “feasibility study” and their continued support for this study. I urge you to review this correspondence. The points I have made to the CDCC are applicable to each of you as well. I also urge that you table this project. It’s an expensive item, one we cannot afford particularly at this time. It’s an item whose single, twisted aim is the delivery of “corporate welfare” to one or more very powerful local businesses. It’s not in the public interest and will, if taken to its politically motivated conclusion work a serious and prolonged hardship on the citizens, the rate-payers and the voters of Dover. Sincerely, James P. Long 323 Columbia Avenue Dover, DE 19904 (302) 674‐5664 1

Copy: Jennifer Hayes, newseditor,the Dover Post. ======= Email scanned by PC Tools - No viruses or spyware found. (Email Guard: 9.0.0.898, Virus/Spyware Database: 6.19700) http://www.pctools.com ======= 2

May 9, 2012 To the Officers and Board Members of the Central Delaware Chamber of Commerce Dover Downs is a successful and well managed business but Dover Downs is not a good neighbor! For more than 2 years, Dover Downs has been pressuring the city of Dover for lower electric rates, claiming that rates currently charged by the Dover municipal electric utility put them at a competitive disadvantage relative to other gaming firms. Recently, Dover Downs stepped-up its pressure on the city of Dover, enlisting the Central Delaware Chamber of Commerce (CDCC) in its scheme to remove the Dover municipal electric utility as an obstacle to its quest for more favorable electric rates. Dover municipal electric utility (Dmeu) delivers electric power to more than 20,000 customers, most are individual home owners, apartment dwellers and small local business people ... while charging them rates that are among the lowest in the state. And even with these low rates, Dmeu is a very profitable business, returning millions of dollars each year to the City which in effect keeps homeowner and business property taxes low. If this major source of funds were to disappear, Dover would be in dreadful straits for at least several years as the city developed new revenue streams to replace those that had been provided by Dmeu. I’m appalled that Dover Downs, the recipient of many government-supplied benefits including a regional non-competitive gaming license and excellence transportation connections to the Baltimore-Wilmington-Philadelphia population center would sink so low as to intentionally seek to destroy a 110 year old award-winning business … a well managed, well run and well maintained business that delivers safe, reliable and inexpensive electric power to all while funding many of the excellent quality of life services which residents, business owners and visitors to Dover have come to expect. Sadly, CDCC has abandoned its publically stated principles which include being “non-partisan,” “apolitical” and “promoting the general welfare, prosperity and quality of life in Central Delaware.” CDCC has become a supporting lackey for Dover Downs in its nefarious scheme to gain corporate welfare at the expense of the people of Dover. Accompanying this e-mail message are 3 attachments. The first contains letters written by CDCC officials, members and others to Dover government officials recommending a particular course of action in the Dover Downs rate issue. The second is a summary of remarks made by Ms. Diogo of CDCC during the open forum preceding the Dover city council meeting on January 23, 2012. These 2 attachments clearly establish that CDCC is serving the interests of Dover Downs while forsaking its responsibilities to the city, to the people of Dover and to central Delaware. The third attachment is paragraph 17 from the governor's 2012 "State of the State" message. It is included here because it was referenced by Ms. Diogo in her Open Forum statement to the Dover city council.

I urge CDCC to back away from this self-serving, political power play by Dover Downs to enhance its already attractive revenue / expense situation. Further, I urge CDCC to reclaim its principles by issuing a statement of neutrality in this matter. And finally, if CDCC would like to play a pro-active role in this matter, let me suggest that it encourage all parties to seek a legislative solution to the generic problem faced by Dover Downs. There are 9 municipal electric utilities in the state and in turn each will surely encounter some important economic growth opportunities that are in conflict with the rate inflexibilities inherent in the municipal electric utility legal structure. Advocating the legislative route to solution would give CDCC the opportunity to once again demonstrate its leadership as well as its commitment to fair play and sustained economic growth in central Delaware. Sincerely, James P. Long 323 Columbia Avenue Dover, DE 19904 (302) 674-5664.

Chair Kelly A. McKown May 11, 2012 First Vice Chair Victor N. Schimp Mr. James P. Long Vice Chair Economic Development 323 Columbia Avenue David W. McGuigan Dover, DE 19904 Vice Chair Organizational Development Ronald L. Sayers Dear Mr. Long: Vice Chair Community Affairs Tammy J. Ordway I am writing to you on behalf of the Board of Directors for the Central Delaware Chamber of Commerce (CDCe) in reply to your letter regarding the City of Dover Vice Chair Legislative Affairs electric and the CDCe's position on this issue. C. Scott Kidner Vice Chair Military Affairs The CDCCstarted having discussions with the City of Dover four years ago regarding Honorable John C. Still, III the . electric >~.. •..•.. rates .. These discussionsstarted o. I (. ~ •• . ••• ' .,', "' .• :~ • ," , .';' .'.. due to the increasing concern .• ~. •• '. _ ." • Treasurer sl,.l.rr.Q.lJn<;ling.elE~ctriErates with'ou-r"manufacturirilfinaustry: :rJJahy 6f:our'" A • .,'; ~. Earl P.Tanis ".:.~ ~,' _ .:'~ '::~':; ...:'.'-- ....•~ i~';~::":·" i .,'k, .. ~ L'· •..•• ,. '. I manufacturers compete with other facilities withln their corporate structurefornew Vice Chair - ~i~.; .-:n': ;,.!.' ,,;< :::':"'("- '''-':.'.'~~ :';'.'! .." :.~::..<.:,:' ..•. :-.'..; ), . ·,';r,,_., , ;,::>, !~••• ",:" .• Smyrna/Clayton lines and expansions: One of the issues' that have hinde"red th~if 'abil'ity to' compete Richard W. Downes with other facilities is the rate they pay for electric. .~~ Past Chair Lisa S. Hastings In the past two years, other businesses both large and small, have expressed their Directors Dr. William N. Johnston ~ ~,--,---~----------~~--------- concern with their electric rates. The CDCCand the City.partnered together to host Patricia B. Key two events to allo~ CDCC Me-;bers to meet with City Officials to--;;penly discuss their Janie M. Libby Sean M. Mace concerns. Mitchell F. Magee Beth B. Miller 'L JeffreyT. Puglia o Last year, the CDCCand the City of LJover established a iJuJget focus group made of Lynne S. Schaefer ,.. Honorable Pamela Thornburg area business leaders to work with the City to share their "best practices" in cost Dr. Harry L. Williams reductions to see if there were opportunities within the City budget to apply some of Honorary Board Members Honorable Bradley S. Eaby the measures used by their businesses. Col. Mark Camerer President For the past year, the CDCC has been urging the City to do a feasibility study to Judy Diogo, CFRE, 10M determine the value of their electric assets and to access their electric rates. Staff GinaAurora ; . ....~,.. .; '. '" ' "" ',.- Cristal Brenneman Sandy Dale The mu.tii~ipal electric issue was also addressed by Governor Markeli, as you know, in John R. Ennis hi~ S.t,~t;·~f the St~te Address. We are pleased thatthe Governor, along with the' municipal leaders, have now developed a Memorandum of Understanding which "The Central Delaware Chamber of Commerce is the network of choice for Premier Businesses in Central Delaware" ~ * * * 435 N. DuPont Hwy. • Dover, Delaware 19901 302.734.7513 • fax 302.678.0189 www.cdcc.net • email: info@cdcc.net

begins the process of lowering electric rates over the next three years and establishes an economic development electric rate. As a Chamber, we will continue to work with the City of Dover and others to address the concerns of our members and to identify solutions and to create partnerships that move us forward in creating a county that is a good place to do business and a good place to live.

May 21, 2012 Dear Ms. Diogo: Thank you for your written response to my e-mail letter of May 9 sent to the officers and board members of the Central Delaware Chamber of Commerce (CDCC) regarding CDCC’s efforts to influence the sale of the Dover municipal electric utility (Dmeu). You noted that discussions between CDCC and the City of Dover began 4 years ago, motivated by expressions of concern from members of your manufacturing group for their inability to successfully compete in the general market for their products as well as within their individual intra-company markets for new products and / or product line enhancements and expansions. Among the concerns mentioned by these members and the single concern you brought to the City was the cost of electric power supplied by Dmeu. You then went on to note that CDCC has been a pro-active partner with the Dover city council, jointly sponsoring events and financial-planning support groups. The final item on your list is worth quoting in part because it highlights your objective: “In the past year, the CDCC has been urging the City to do a feasibility study to determine the value of their electric assets…” Essentially, you’re urging the Dover city council to conduct a study which you hope will lead to the removal of Dmeu; a 110 year-old business, an award winning business, a business that has consistently and reliably delivered electric power, during fair weather and foul, to residents and area businesses alike at rates below the state average for electric power. But CDCC has offered no suggestions for transitioning from Dmeu to some other form of electric utility. And, apart from vague promises of lower electric rates (which are already on the way), CDCC has offered not a single benefit that would accrue to the residents and rate-payers of Dover should you realize your objective…the removal of Dmeu. Between engineering reports and consultants’ studies, Dmeu might be one of the most closely examined electric utilities in the state. In addition to many other reports and studies, Burns & McDonnell of St. Louis, an engineering consulting firm has, each year since at least 2003 as part of a municipal bond agreement, reviewed the entire Dmeu operation. I quote here from the April 18, 2012 cover letter to their 2011 report: “Based on these reviews and assessments, it is the opinion of Burns & McDonnell that the Electric System [Dmeu] is being operated and maintained, including replacements and upgrades, as appropriate, in a manner that is consistent with current electric utility practices.” Does this sound like an electric utility that needs to be replaced? To me, it sounds like an electric utility that’s doing a good job for its customers. Continuing with the “study” issue, the feasibility study you’re “urging” the City of Dover to undertake would be very expensive. To support this position, I cite the recent experience of the City of Lewes, DE. Less than 2 years ago, Lewes received an offer to sell its municipal electric

utility, an offer they eventually rejected. To evaluate the offer, the Lewes Board of Public Utilities engaged J.W. Wilson & Associates of Arlington, VA to conduct the very same type of study you would like the Dover city council to undertake. According to Mr. Wendell Alfred, head of the Lewes Board of Public Utilities, their study cost $130,000.00 and, based on a simple comparison of utilities (Lewes has 4,000 customers, most of them residential while Dover / Dmeu has 25,000+ customers, 19,000 of them residential) Mr. Alfred speculates that a study of the Dmeu operation would cost at least $250,000.00. But the end-to-end process would cost substantially more! Within the Dover city government and Dmeu, there is not the technical skill required to prepare consulting solicitation documents called Requests for Proposal or RFPs. Nor are there skills to evaluate any consultant’s response to an RFP. Nor are there skills to evaluate any study that a selected consultant would deliver to the City. Essentially, to pursue your recommendation the City would be required to employ a series of expensive technical experts, adding substantially to the basic cost of a study. To support this statement, I note that the City of Dover has already employed a Washington DC-based attorney to assist in the preparation of an RFP for the very study CDCC would like to have conducted. The study you’re urging the City of Dover to undertake so that you might achieve your objective - the removal of Dmeu (which is a major source of city revenue) could easily cost the city $350,000.00 to $500,000.00...and this at a time when the city is facing a one million dollar + budget short-fall. It appears that CDCC is being very generous to itself with City of Dover funds! Perhaps CDCC would care to remove this unflattering perception by offering to fund all costs associated with the study it’s encouraging the Dover city council to undertake. Earlier this year, I submitted to the Dover city clerk’s office a request under the “Freedom of Information Act” for correspondence related to your issue. Here’s a summary of what I received in response: 2 letters (virtually identical) from 2 CDCC members: Sheraton Hotel – Mr. Schimp and Dover Downs – Mr. Sutor. 2 letters from CDCC officers: Mr. Schimp (again) - as Chairman of CDCC and you as President. 2 letters from organizations supporting your efforts: the Delaware Restaurant Association and the Delaware Hotel and Lodging Association – also a form letter but different from the form letter already mentioned. 3 letters from Dover residents (2 of them hand written), all expressing opposition to any change in the status of Dmeu. Only 2 CDCC members (albeit 2 of your most powerful members) bothered to send letters in support, and only form letters at that. For the CDCC, a larger-than-county-wide organization,

that’s at best a negligible demonstration of member support given that your web site provides the following membership data: 850 members overall 15 members in 3 manufacturing related groups 23 members in your “hotel and motel” group 31 members in your “restaurant” group. And I also note that there was not a single letter from a CDCC manufacturing group member. You’re really straining credibility in claiming to have member support for your goal of removing Dmeu. Now I want to turn to the motivation behind your objective…why does CDCC want to replace Dmeu? CDCC also represents businesses in Smyrna and Clayton, each of them serviced by a municipal electric utility. And CDCC has members in Milford which is also serviced by a municipal electric utility. But CDCC has made no substantive effort to argue for the replacement of any of these municipal electric utilities. It’s therefore reasonable to conclude that the CDCC member(s) with the Dmeu problem is a Dover-based business…a business which receives its electric power from Dmeu.. Since the problem is an electric rate issue, the recent “memorandum of agreement” between Governor Markell and Mr. McCullar of Delaware Municipal Electric Corporation could provide a win-win solution for all parties. But this route will work only if there are genuine opportunities to achieve meaningful economic development. If this is merely a veiled attempt to gain a slice of “corporate welfare,” it would and it most certainly should fail. At this point Ms. Diogo, it’s appropriate to simply ask, “Where’s the beef?” Who is this Dover- based CDCC member(s) that has a problem with Dmeu? And what specifically is the real problem your Dover-based member(s) has with Dmeu? If you’ll be honest and candid with the people of Dover, you might be surprised to find that they too are eager for an equitable, mutually acceptable solution to your member’s difficulty. If CDCC insists on remaining less than completely forthcoming, the Dover city council may nevertheless come to see things your way. But I’m certain that the electric rate-payers of Dover, the residents of Dover and the voters of Dover, after having been stripped of their municipal electric utility and the Dmeu-provided financial support underpinning their other fine quality of life services, will not view CDCC’s actions as being in the public interest. Indeed, if CDCC prevails in its scheme to remove Dmeu, the people of Dover will eventually awake and hopefully extract from CDCC and from its members as well, the pound of flesh they would justly deserve for having suffered at the hands of a self-centered, mean-spirited and clearly anti-community CDCC.

In closing, I offer this thought to you, to your board and to the other officers of CDCC…if your powerful member(s) prevails in this unjust quest to eliminate Dmeu in order to gain reduced electric rates, you can be certain that your phantom member(s) will not stop there. Few things in life are more predictable than the actions of a bully with a recent victory. Your clandestine member(s) will be back once again, using CDCC as a tool to gain personal advantage via lower water and sewer rates, then lower property taxes and then preferential zoning and on and on and on. CDCC will become merely a low-cost hired gun, devoted to gaining corporate welfare for its bully member(s) but incapable of gaining an attentive audience for its own constructive ideas on county-wide economic development. Now is the time for CDCC to do the right thing...turn a deaf ear to the bully's arguments and quietly withdraw your suggestion and your support for a feasibility study! Resume your place as a respected and transparent business leader and you’ll regain the respect of both your community and your hard-working members. But continue as you are, serving as a shill for some corporate bully and you’ll eventually earn both community scorn and the member disaffection you will have come to deserve. Sincerely, James P. Long 323 Columbia Avenue Dover, DE 19904 (302) 674-5664 e-mail copies to: board members and otherCDCC officers.

E-mail response to John Still, CDCC board member, declining his offer for additional information. May 18, 2012 Hello Mr. Still and thank you for your offer to provide additional information. At the moment, I have all the information I require. I will however take the opportunity this e-note provides to comment on the several rate comparisons you sent to me: 1. local utility winter rates - March, 2010 (type of rate unspecified). 2. local residential utility costs - May, 2011. 3. local residential utility costs - June, 2011. With regard to these rate comparisons, I have no argument. At the time these measures were taken, Delaware Electric Co-op clearly held a rate advantage relative to the 9 municipal electric utilities and Delmarva Power. However, even as the 2011 measures were being taken, Delaware Electric Co-op had begun to lose the competitive rate advantage it had secured 5 years earlier through the careful purchase of favorably priced forward contracts. And during this same period (spring-summer of 2011), the Dover municipal electric utility was unwinding the unfavorable contracts it had taken on 5 years earlier, replacing them with contracts offering much more competitive purchased power rates (an indication of this changing situation is the rate rebate currently in effect for Dover municipal electric utility customers). Exactly where the rates are at this moment isn't worth discussing but of critical importance is the direction rates are headed for both Delaware Electric Co-op (Coop) and Dover municipal electric utility (Dmeu). In general, the cost of forward contracts in the market for purchased power is coming down. This will lead to lower power costs for both Coop and Dmeu. But while Dmeu has the flexibility to purchase its power from a number of potential suppliers (including the Calpine site on White Oak Rd. and the very efficient West Depford, NJ plant when each of these comes on-line), Coop has virtually no flexibility whatsoever! Almost all of Coop's power is purchased from Old Dominion Electric Cooperative of Glen Allen, VA (Coop is a member). Old Dominion generates approximately 50% of the power it sells to its members and for the generation of this power it relies almost exclusively on coal-fired and nuclear powered generating plants (Old Dominion purchases about 50% of the power it sells). Recently, coal-fired electric generating operations have come under significantly increased pressure from the Environmental Protection Agency. Even the cleanest, best managed coal-fired plants are flooding our atmosphere with sulfur dioxide and other noxious gases. Consequently, the EPA is putting intense pressure on all coal-fired operations to make the costly changes necessary to eliminate these undesirable emissions.

And in the matter of its nuclear-driven power source, Old Dominion (and consequently Coop) relies on the North Anna Nuclear Power Plant in Louisa County, VA. This facility is just 11 miles from the epicenter of the 5.65 magnitude earthquake which shook much of the northeastern US on August 23 last year (9 after-shocks ranging from 2.19 to 3.94 have been recorded, the most recent on March 26 of this year). Certainly, a seismic event of this magnitude and duration would, under any circumstances attract the attention of the Nuclear Regulatory Commission. But given the Japanese experience, it's reasonable to expect that the North Anna nuclear plant will encounter substantial pressure to improve both structural integrity and operating safety which in turn will lead to major cost pressure on the rates that Old Dominion charges its members, including Coop. Going forward, one can expect that the current Coop rate advantage relative to Dmeu (and all other municipal electric utilities in Delaware) will erode significantly and quite possibly disappear completely. From a rate perspective, Coop is no longer an attractive option! And finally, a brief but crucial comment on Coop's facilities management / maintenance experience...being principally an electric utility serving rural markets, Coop has little or no experience dealing with the concentrated and complex electric distribution system that delivers power to Dover customers ranging from small homes to major manufacturing plants, to the gaming and related operations at Dover Downs and to a myriad of other types of electric power customers. The up-beat rhetoric in their slide presentation aside, Coop would be neither a successful substitute for Dmeu nor a viable long-term partner. Sincerely, James P. Long.

EXHIBIT #5 Towne Dollar & Tobacco, LLC Council Meeting of 05/29/2012 1043 Walker Road Dover, Delaware 19904 302-736-3813 May 25,2012 City of Dover P 0 Box 475 Dover, Delaware 19903 Attn: Ann Marie Townshend, AICP Director, Planning & Community Development RE: Towne Dollar & Tobacco, LLC Request for time extension for hearing dated 5-29-2012 Dear Ms. Townshend: I was notified on May 24, 2012 of the preliminary results of the testing on the sample of pure that was sent to the Medical Examiner's office. At this time, I have been instructed by my legal counsel to formally request a time extension for my hearing that has been scheduled for May 29, 2012. I will need this time in order for my attorney to request two samples of the pure from the appropriate party in custody of my inventory so that we can obtain an independent analysis and report. I have been in contact with several independent laboratories, and have been told that a formal analysis and report can be done in a 5 business day period of time. I am not sure at this time how long it will take me to obtain the samples needed from the ME or Dover Police. Obviously, I want to conclude this matter as soon as possible, however, I would not possibly be able to do so for May 29, 2012. I feel that I should be afforded this opportunity in such a legally important matter. Your consideration in this matter will be greatly appreciated. Since this is a holiday weekend, and Monday is the holiday, could you please be so kind as to notify me of your decision by email @ Midniteblue61 @hotmail.com, or notify my attorney Mr. Basil Kolias at bkollias@coochtaylor.com. Thank you in advance for your attention to this matter. __L~-~y, ~a;-ts~·~ Owner- Towne Dollar & Tobacco, LLC

Friday, May 25, 2012 Letter from Towne Dollar & Tobacco, LLC was hand-delivered to the City of Dover office located on Loockerman Street. The letter is to request a time extension for the hearing that was originally scheduled for May 29, 2012. Received by_~Q~.IO'~...lo.L..-____,._;~'-==-':;..=...cA..;;._,o,.---- Date: May 25, 2012 Time: _ S=-~_.S___;,Q_;...,;vn'--L--_ __;:g=--___;:: Hand-delivered by: Yassir Alhassan

EXHIBIT #6 Council Meeting of 05/29/2012