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EXHIBIT #1 COUNCIL M INUTES 07/28/2008 CITY OF DOVER FINANCIAL POLICIES 7/28/08

CITY OF DOVER, DELAWARE FINANCIAL POLICIES The purpose of these policies is to present a standardized set of principles that the City follows in managing its financial and budgetary affairs. These are general statements of policies, which represent long-standing principles, traditions, and practices that will be used to guide the City in maintaining financial stability. It will be the responsibility of the Finance Department to ensure the financial objectives of these policies are maintained. Revenue Policy 1. The City will strive to maintain a broad and diversified revenue base that will equitably distribute the burden of supporting City services and will protect the City from short-term fluctuations in any one revenue source. 2. The City will actively support economic and industrial development recruitment and retention efforts to provide for a solid revenue base. 3. The City will maintain timely collection systems and implement necessary enforcement strategies to collect revenues from available sources. 4. The City will establish user fees and charges for services, when feasible, at levels related to the cost of providing the services. The City will review the fees and charges every three to five years to determine modifications needed to keep pace with the cost of providing the services. Property Tax Rates are set annually. 5. The City will review its incentive programs every three years and provide City Council with the amount of foregone revenues and any recommended changes. 6. The City will establish, when feasible, self-supporting enterprise funds and intergovernmental service funds in which a relationship between revenues and expenditures clearly exists. 7. The City will project current revenues on a conservative basis so the actual revenues will consistently meet or exceed budgeted revenues. 8. The City will maintain a budgetary control system and will prepare reports, which compare actual revenues to budgeted amounts. 9. The City will limit the designation of General Fund revenues for specified purposes to maximize flexibility in budgeting and revenue utilization. 10. The City will review annually and revise, where necessary, its cost allocation formulas, i.e. internal service departments. 2

11. Upon satisfying all rate covenants the City will provide operating transfers to the General Fund. From the Water/Wastewater Utility no greater than 4.5% or $750,000. From the Electric Utility no greater than 6.5% or $7,250,000 of the utility operating revenues. Both transfer calculations will exclude the carry forward budget balance, County Sewer Fees, and State Utility Tax. The Utility transfers will not exceed 25% of the General Fund Revenues. Expenditure Policy 1. Basic and essential services provided by the City will receive first priority for funding, i.e. Public Safety & Health, Utilities, Streets, & Sanitation. The City will establish performance measurements for all program areas, when feasible. These measures will reflect the demand, workload capability, and projected outcomes for the program to accomplish its objectives. 2. The City will adopt a balanced budget, by fund, for all funds maintained by the City, in which total anticipated revenues must equal or exceed the budgeted expenditures for each fund. The Beginning Budget Balance will not be considered a revenue source. 3. The City will maintain a budgetary control system to ensure adherence to the adopted budget and will prepare reports, which compare actual expenditures to budgeted amounts. 4. The City will refrain from budgeting revenues derived from infrequent and unanticipated transactions for ongoing expenses. These revenues will be set aside for asset replacement or as otherwise directed by Mayor and Council. 5. The City will provide access to medical, dental, vision, life, AD & D, and short-term disability insurance for its employees. The cost for these benefits will be a shared responsibility between the City and its employees as outlined in the City Personnel Handbook or collective bargaining agreements. 6. The City will provide access to medical and dental insurance for its retiree’s and their families. The cost for these benefits will be a shared responsibility between the City and its retirees as outlined in the City Personnel Handbook or collective bargaining agreements. 7. The City will provide access to appropriate retirement plans for its employees. The City will make contributions for eligible employees at the actuarial determined percentage defined for each of the respective retirement plans. 8. The City will establish an Other Post-Employment Benefit Fund (OPEB) and provide available funding for early implementation of a new accounting standard promulgated by the Government Accounting Standards Board. When the standard officially takes effect, the City will make contributions for eligible employees and retirees at the actuarial determined rates or percentages to fund future retiree medical benefits. 3

Debt Policy 1. The City will maintain a debt management policy and full disclosure on financial reports. 2. The City will maintain communications with bond rating agencies and continue to strive for improvements in the City’s bond rating. 3. The City will adhere to its debt covenants. 4. The City will review its debt capacity every three years. 5. The City will pay for all capital projects and capital improvements on a pay-as-you-go basis using current revenues whenever possible. If a project or improvement can not be financed with current revenues, long-term debt or use of reserves will be recommended. 6. The City will refrain from issuing long-term debt for a period in excess of the expected useful life of the capital project. 7. The City will use special assessment revenue or other self-supporting bonds instead of general obligation bonds, when practical. 8. The City will seek refinancing of outstanding debt if it is determined that the City will benefit by reduced interest expense over the remaining life of the bonds. Budget Balance/Reserve Policy – General Fund 1. The City will strive to maintain a minimum Budget Balance, of at least 8% and no greater than 12% of the current year operating revenues for the General Fund, excluding the carry forward balance. The purpose of the budget balance is to meet temporary fluctuations in cash flows and to provide a cushion for loss of revenues until operating changes can be implemented. If the existing Budget Balance exceeds the required level, such funds may be used to provide for non-recurring expenditures when the purchases cannot be accommodated through current year savings or as otherwise designated by City Council. The City may use monies in the Budget Balance only in times of fiscal and economic hardship. 2. Once achieved, at no time should the City’s budget balances fall below their specified percentages. If a shortfall occurs in the budget balance and immediately restoring the balances to the specified percentage would cause an extreme burden on the taxpayers, the budget balance may, with the Mayor’s and City Council’s approval, be restored to the specified percentage within one year, but in any case, no longer than three years. 3. The City will maintain a minimum reserve, in a contingency account, of at least 2% of the current year operating revenues for the General Fund. The City may only use monies in the contingency accounts to cover emergencies of a non-recurring nature that are over and above the normal course of operations. Examples are uninsured losses, storms or hurricane damages. The Contingency Reserve will not be used to balance the operating budget. 4

4. The total of the General Fund budget and contingency balances shall not exceed 17% (~ 2 months) of Budgeted Operating Revenues. 5. The City will create a Capital Asset Replacement account for Governmental Fund asset procurements. Optimally, the amount set aside for future asset replacements should equal the annual depreciation of the current assets. The City will appropriate excess (amounts greater than budgeted) revenues, to fund this account, or if the balance is less than the $500,000 minimum, $200,000 per annum until such time the minimum balance is replenished. 6. The City will create a General Capital Project Fund to account for all General Government asset procurements and projects. The City will provide operating fund transfers and/or debt proceeds for each fiscal year’s Capital Investment Plan. All vehicle and equipment purchases under $25,000 will be budgeted on a pay as you go basis. Budget Balance/Reserve Policy – Water/Wastewater Fund 1. The City will strive to maintain a minimum Budget Balance, of at least 8% and no greater than 17% (two months) of the current year operating revenues for each of the Water & Wastewater Utility Funds, excluding the carry forward balance. The purpose of the budget balance is to meet temporary fluctuations in cash flows and to provide a cushion for loss of revenues until operating changes can be implemented. If the existing Budget Balance exceeds the required level, such funds may be used to provide for non-recurring expenditures when purchases cannot be accommodated through current year savings or as otherwise designated by City Council. The City may use monies in the Budget Balance only in times of fiscal and economic hardship. 2. Once achieved, at no time should the City’s budget balances fall below their specified percentages. If a shortfall occurs in the budget balance and immediately restoring the balances to the specified percentage would cause an extreme burden on the ratepayers, the budget balance may, with the Mayor’s and City Council’s approval, be restored to the specified percentage within one year, but in any case, no longer than three years. 3. The City will maintain a minimum reserve, in a contingency account, of at least 2% of the current year operating revenues for each the Water & Wastewater Fund. The City may only use monies in the contingency accounts to cover emergencies of a non-recurring nature that are over and above the normal course of operations. Examples are uninsured losses, storms or hurricane damages. The Contingency Reserve will not be used to balance the operating budget. 4. The total of the combined Water & Wastewater Fund budget and contingency balances shall not exceed 25% (3 months) of Budgeted Operating Revenues. 5. The City will maintain a Capital Asset Replacement account to cover replacement or procurement of assets of the utility. Optimally, the amount set aside for future asset replacements should equal the annual depreciation of the current assets. The City will maintain a minimum balance of $500,000 for each utility for Capital Asset Replacements. 5

The City will appropriate excess revenues to fund this account, or if the balance is less than the minimum $100,000 per annum for each utility until such time the minimum balance is achieved. 6. The City established by ordinance on December 17, 1996 the Wastewater Impact Fee Reserve to provide for future expansion of the City’s wastewater system due to increased demand. The ordinance further provides for debt service payments attributed to wastewater expansion projects to be funded by the current year’s collection of Impact Fees and the remainder to be deposited into the reserve account. The City shall maintain a minimum of 20% of wastewater revenues in the Impact Fee Reserve account. Amounts used to finance projects shall be replenished by the operating revenues of the Wastewater Fund over the succeeding seven years of any project completion. 7. The City established by ordinance on February 1, 2008 the Water Impact Fee Reserve to provide for future expansion of the City’s water system due to increased demand. The ordinance further provides for debt service payments attributed to water expansion projects to be funded by the current year’s collection of Impact Fees and the remainder to be deposited into the reserve account. The City shall maintain a minimum of 20% of water revenues in the Impact Fee Reserve account. Amounts used to finance projects shall be replenished by the operating revenues of the Water Fund over the succeeding seven years of any project completion. 8. The Water & Wastewater Improvement & Extension Fund budget balance shall be no less than $200,000 of the current fiscal year’s appropriation for water and wastewater projects to allow for project variances and change orders; a 10% contingency shall be included in project budgets greater than $250,000 if the Department Head determines it to be appropriate. All vehicle and equipment purchases under $25,000 will be budgeted on a pay as you go basis. The City Manager shall make the necessary budget amendments in accordance with the City of Dover Purchasing & Budget Amendment Policies. Budget Balance/Reserve Policy – Electric Revenue Fund 1. The City will strive to maintain a minimum Budget Balance, of at least 8% and no greater than 12% (45 days) of the current year operating revenues for the Electric Revenue Fund, excluding the carry forward balance. The purpose of the budget balance is to meet temporary fluctuations in cash flows and to provide a cushion for loss of revenues until operating changes can be implemented. If the existing Budget Balance exceeds the required level, such funds may be used to provide for non-recurring expenditures when purchases cannot be accommodated through current year savings or as otherwise designated by City Council. The City may use monies in the Budget Balance only in times of fiscal and economic hardship. 2. Once achieved, at no time should the City’s budget balances fall below their specified percentages. If a shortfall occurs in the budget balance and immediately restoring the balances to the specified percentage would cause an extreme burden on the taxpayers, the budget balance may, with the Mayor’s and City Council’s approval, be restored to the specified percentage within one year, but in any case, no longer than three years. 6

3. The City will maintain a minimum reserve, in a contingency account, of at least 1% of the current year operating revenues for the Electric Revenue Fund. The City may only use monies in the contingency accounts to cover emergencies of a non-recurring nature that are over and above the normal course of operations. Examples are uninsured losses, storms or hurricane damages. The Contingency Reserve will not be used to balance the operating budget 4. The total of the combined Electric Revenue Fund budget and contingency balances shall not exceed 25% (3 months) of Budgeted Operating Revenues. 5. The City has established by bond covenant an account to cover insurance deductibles on the electric transmission and distribution system or the generating plants. The City shall maintain a minimum balance of $350,000 to cover various deductibles. 6. Recognizing price fluctuations in the wholesale power markets the City has established a rate stabilization reserve. The purpose of using such a reserve is to level off the fluctuations in the wholesale power supply market and in turn provide stable rates to our customers. In those instances where the actual cost of power supply and generation are less/more than the budgeted cost of power supply and generation, the City will transfer the difference to/from the Rate Stabilization Reserve. The balance shall be maintained at a minimum of 3% not to exceed 10% of the purchase power cost in any given year. If the reserve balance exceeds the 10% maximum, a credit will be applied to the power cost adjustment. 7. The Electric Improvement & Extension Fund budget balance shall be no less than $200,000 of the current fiscal year’s appropriation for electric system projects to allow for project variances and change orders; a 10% contingency shall be included in project budgets greater than $250,000 if the Department Head determines it to be appropriate. All vehicle and equipment purchases under $25,000 will be budgeted on a pay as you go basis. The City Manager shall make the necessary budget amendments in accordance with the City of Dover Purchasing & Budget Amendment Policies. 8. The City has established an account to provide for capital financing of Future Capacity or system expansion. The City shall maintain a balance equivalent to the value of 10% growth in capacity at any given time, or no less than $10,000,000. Amounts used to finance projects shall be replenished by the operating revenues of the Electric Revenue Fund over the succeeding seven years of any project completion. 9. The City has established an account to provide for replacement or procurement of utility system assets, otherwise known as Depreciation Reserve. Optimally, the amount set aside for future asset replacements should equal the annual depreciation of the current assets. The City will maintain a minimum balance of $10,000,000. The primary purpose of this account is to provide partial or all financing of major capital projects and minimize debt service payments. The account is also intended to cover unforeseen capital replacements due to equipment breakdowns, storms or hurricane damages. Amounts used to finance projects shall be replenished by the operating revenues of the Electric Revenue Fund over the succeeding seven years of any project completion. 7

10. The total of the combined Electric Revenue and Electric Improvement & Extension Fund budget and reserve balances shall be benchmarked at 50% Budgeted Operating Revenues. Operating Fund Budget Balance and Reserves shall be adjusted to appropriate levels through adjustments in the operating budget. Improvement & Extension Fund Budget Balance and Reserves shall be adjusted in accordance with the Capital Improvement Plan. Investment and Cash Management Policy 1. The City will deposit all receipts on a timely basis in interest bearing accounts. 2. The City will strive to maximize the return on its investment portfolio without jeopardizing principal amounts. 3. The City will limit its investments to the types of securities provided for by Delaware statutes. 4. The City will diversify its investments by maturity date to protect against market fluctuations. 5. The City will purchase securities from qualified institutions based on competitive bids in an effort to obtain the highest available rates. 6. The City will maintain an Investment Policy based on prudent investment practices and will monitor all investment managers’ compliance with policy objectives. Capital Improvement Policy 1. The City will prepare and update, as needed a five-year Capital Improvements Program (CIP) which will provide for the orderly maintenance, replacement, and expansion of capital assets. 2. The CIP will identify long-range capital projects and capital improvements of all types, which will be coordinated with the annual operating budget to maintain full utilization of available revenue sources. 3. When preparing the CIP, the City will seek to identify all viable capital projects and capital improvements required during the subsequent five-year period. These projects and improvements will be prioritized by year and by funding source. 4. Every attempt will be made to match projects and improvements with available funding sources. Future operating costs and savings associated with a project or an improvement will also be given consideration in the establishment of priorities. 5. The City will seek Federal, State, and other funding to assist in financing capital projects and capital improvements. 6. The City will incorporate the reasonable findings and recommendations of other cities’ Boards, Commissions, Committees, and Citizen Task Forces, as they relate to capital projects and improvements. 8

7. The City will seek input from the public by holding public hearings in relation to the establishment of projects and project priorities. Financial Reporting Policy 1. The City’s accounting system will maintain records in accordance with accounting standards and principles outlined by the Governmental Accounting Standards Board (GASB), Financial Accounting Standards Board (FASB), and the State of Delaware. 2. The City will employ an independent accounting firm to perform an annual audit of the City’s finances and make the annual audit available to all required and interested parties. 3. The City will produce monthly and quarterly financial statements reporting the current periods’ activity for all funds maintained by the City. 4. The City will prepare an annual budget document that provides a basic understanding of the City’s planned financial operations for the coming fiscal year. Copies of the proposed and final budget will be made available to all interested parties and opportunities will be provided for citizen input prior to final decisions on the budget. 5. The City will place continued emphasis on review and maintenance of an accounting system which provides strong internal budgetary and accounting controls designed to provide reasonable assurance, but not absolute, assurance regarding: (a) the safeguarding of assets against loss from unauthorized use or disposition and, (b) the reliability of financial records for preparing financial statements and reports, and the maintaining accountability for assets. 6. The City will seek annual renewal of the Government Finance Officers Association’s (GFOA) Certificate of Achievement for Excellence in Financial Reporting and the Distinguished Budget Presentation Award. Adoption: 1. Approval by City Council: January 28, 2002 2. Amended by City Council: November 25, 2002 3. Amended by City Council: May 10, 2004 4. Amended by City Council: February 26, 2007 5. Amended by City Council: July 28, 2008 9

CITY OF DOVER DEPARTMENT OF FINANCE PROCEDURE MANUAL TITLE: Budget Administration - Guidelines PROCEDURE # F306 for Operating Departments DATE: July 10, 2006 Revised June 23, 2008 This policy is intended to permit the redistribution of funds in departmental budgets. It establishes the procedure to be followed when the approval of a supplemental appropriation is requested. It restricts the redistribution of capital outlay accounts. 1. Definitions, as used in this policy: “Fund”: In governmental accounting, a fund is a fiscal and accounting entity with a self- balancing set of accounts, created and maintained for a particular purpose and having transactions subject to legal or administrative restrictions. A separate budget is provided for each fund. “Department”: Departments are the major organizational sub-divisions. They have a broad overall purpose. The City of Dover is organized into twelve (12) departments: Administrative Services, Parks, Recreation, & Library, Police, Public Services Group, Public Utilities, City Clerk, City Manager, Information Services, Finance, Human Resources, Central Services, and Tax Assessor. “Division”: Is the major operational areas of the City. Each Division has been assigned to one of the Departments listed above according to the type of activity it performs. For example, the Electric Engineering Division is part of the Electric Department. “Category”: Within each division, each expenditure line item is grouped into a category of related expenditures. The budget for each line item is listed by categorical total. Examples of a category include personnel services, materials & supplies, administrative expenditures, capital outlay, project accounts, and depreciation. 2. Department Managers may redistribute monies “within” a group of accounts in a particular category, except salary/benefits, and capital outlay accounts. Form COD #98 shall be used to request the transfer of funds. The monies shall not be encumbered until the Finance Director has returned a copy of Form COD #98 advising the manager that the redistribution has been entered into the budget software. 3. Transfers between categories material/supplies and administrative may be made with the City Manager’s approval. A copy of the change must be submitted to the Finance Department for verification and confirmation, and then forwarded to the City Manager. Confirmation of the change will be made to the originating department by the Finance Department once the change has been approved.

Procedure # F306 Budget Administration - Guidelines for Operating Departments (continued) 4. Transfers from salary and benefit accounts are permitted with approval of the City Manager to cover unanticipated expenses created by vacancies. Examples are advertising, agency labor, contract services, and recruiting agencies. 5. No funds authorized in capital outlay may be encumbered unless said purchase was detailed in the “approved” budget. Any CIP deferrals due to cost over-runs in other CIP items shall be communicated to the Council and the Controller. The City Manager may approve transfers of savings from completed CIP items to non-completed CIP items. Any transfers that cause the particular item or project to exceed its original budget 25% or greater will be communicated to Council and the Controller. To request an exception in capital outlay or project categories, submit a written memorandum explaining the request and attach a copy of the original budget submission. The memorandum must explain the reason for not purchasing the authorized items. A copy noting the action taken on the request by the City Manager will be returned to the respective department. Council and the Controller will be copied on all exception request approvals. All capital outlay change requests must be accompanied by a Capital Improvement Project (CIP) worksheet in the following instances: - Scrap a CIP and create a new CIP - Reduce approved CIP and create a new CIP - New funded CIP (grant) The Controller will adjust project budgets each year to include prior year project balances before finalizing the Carry Forward Budget Balances for multi-year projects or projects not completed due to unforeseen circumstances. This process will be followed only on projects that were approved by City Council in a prior year CIP. 6. The City Manager may approve intra-fund transfers (i.e., within the General Fund) of up to five percent per annum, Form COD #98, with the exception of line items associated with salary and benefits. 7. All personnel positions will receive and be adhered to, the documented increases as approved through the budget process. Any exceptions require Council approval. 8. Budget amendments exceeding that authorized above or that affect budget balances shall be referred to the City Council. \\Dover_1\finance\PROCEDURES\F306 w ADD.wpd