Minutes

LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE The Legislative, Finance, and Administration Committee meeting was held on July 14, 2014, at 6:00 p.m. with Chairman Slavin presiding. Members present were Mr. Anderson, Mr. Hare, Mr. Shevock, and Mr. Sudler. Members of Council present were Mr. Dixon (arrived at 6:37 p.m.), and Mr. Hutchison. Mayor Christiansen was also present. AGENDA ADDITIONS/DELETIONS Mr. Sudler moved for approval of the agenda as presented, seconded by Mr. Shevock and unanimously carried. Proposed Financial Reforms - Public Safety Fund During the Committee meeting of June 23, 2014, Mr. Slavin advised members that during the June 11, 2014 Special City Council Meeting - Budget Review he proposed a series of 14 financial reforms to be addressed over the next six (6) to nine (9) months that would assist in shaping the City's Budget for FY 2015/2016. He stated that the proposed reforms were clustered into four (4) separate areas, as follows: 1) public safety; 2) compensation policies; 3) property tax governance; and 4) restrictions on uses of appropriations. He requested that members consider the public safety area first and that staff be requested to review the reforms, develop recommendations, and provide information on any financial gap that may result. He explained that the review would allow members to identify whether there was a need to create policy, ordinances, or Charter changes to implement any changes that may result from those discussions. Mr. Slavin stated that the Public Safety issue comprised five (5) of the 14 proposed reforms: 1) creation of a Public Safety Fund to be comprised of all costs associated with police, fire, and ambulance services; 2) revenue to the Public Safety Fund shall include all monies included in the revenue categories of Fines and Police Revenue, Police Extra Duty, Civil Traffic Penalties, Property Tax, and Grants related to these functions; 3) expenses against the Public Safety Fund shall include all monies included in the expense categories of Life Safety, Police, Police Extra Duty, and Fire; 4) the entire amount of funds received from the revenue category of Property Tax will be dedicated to the Public Safety Fund; and 5) it is the stated policy of City Council that the City shall have a goal of covering 100% of the costs for the Public Safety Fund with the revenue categories of Fines and Police Revenue, Police Extra Duty, Civil Traffic Penalties, Property Tax, and Grants by FY 2025. Mr. Slavin stated that, essentially, this would put all costs for public safety in one (1) area, direct certain revenues to support that, and establish that the City’s policy would be to true up those expenses and revenues within the next ten years. Mrs. Donna Mitchell, Controller/Treasurer, reviewed a memo dated July 9, 2014 as well as a summary of what a Public Safety Fund would look like based on the Fiscal Year 2015 Budget. She noted that, for this discussion, Public Safety included the following divisions/cost items: Fire, Life Safety, Emergency Management Coordinator, Code Enforcement, Inspections, Police (all divisions), and Police Pension contributions (pass through of State Grant), which are the same divisions included in Public Safety in accordance with the grouping of expenditure categories in the Comprehensive Annual Financial Report (CAFR). She indicated that a subtotal was included to segregate the categories included in the CAFR and the Discussion Draft of the Proposed Financial Reforms.

LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE MEETING OF JULY 14, 2014 PAGE 2 Mrs. Mitchell assured members that segregating Public Safety Revenues and Expenditures for budgetary purposes was permissible; however, for the audited financial statements they are required to be reported as General Fund Revenues and Expenditures, along with all other General Government activities. She advised members that if the decision were made to implement a Public Safety Fund, this would create an additional workload for the Finance Department and she would appreciate the opportunity to discuss the purpose and benefit of segregating these items into a stand-alone fund before making this change. In addition, Mrs. Mitchell recommended that this change be implemented during the budget process and not after a budget has been approved. This would prevent a large volume of manual work moving budgets and current financial activity to the new fund. Mrs. Mitchell noted that the summary of the Public Safety Fund included Code Enforcement, Inspections, and Emergency Management expenditures, as well as Permits and Other Fees on the revenues side. Responding, Mr. Slavin relayed appreciation for this inclusion, explaining that his intention was to ensure that both the revenues and expenses were included. Mrs. Mitchell stated that, based on these amounts, there would be an approximate $880,000 shortfall for revenues in the FY 2015 budget, which would equate to an approximate tax rate of 2.78¢. Due to time constraints, Mrs. Mitchell stated that staff had not had the opportunity to conduct a forecast of revenues and expenses for the long-term to determine if the revenues would keep up with the expenses or lag the expenses and create a bigger gap. Responding to Mr. Slavin, it was Mrs. Mitchell’s opinion that no Charter changes or ordinance amendments would be required to create the Public Safety Fund as suggested. She explained that the process would require the approval of City Council and the establishment of a policy for the Public Safety Fund, similar to the financial policies that had been adopted for the other three (3) major funds. Mr. Scott Koenig, City Manager, questioned if there was an intent to create a separate public safety tax. He advised members that there had been much discussion at the end of the legislative session regarding special taxes, taxing districts, etc. He explained the need to obtain the results of the final disposition of this legislation before providing members a definitive answer. Responding, Mr. Slavin stated that his intention was to be able to tell taxpayers who inquire that 100% of the property taxes are dedicated to public safety. Mr. Hare stated that, although he had no objections to the creation of a Public Safety Fund, he would not support an increase in property taxes. Responding, Mr. Slavin stated that no increase in property taxes would be introduced upon establishing the Fund and that it would not prohibit any other revenues to offset taxes, noting that future Councils would be making those determinations. In response to Mr. Anderson, Mr. Slavin stated that there was no intention to create a tactic to pressure members of City Council to raise taxes in the future. He reiterated that the main benefit would be to provide property owners a definitive understanding regarding the use of property taxes by the City of Dover. He stated that it was intended to be a disciplinary tool for budgeting and

LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE MEETING OF JULY 14, 2014 PAGE 3 explaining expenses. With regard to the future, he stated that if there was a surplus of revenues (over expenditures), it would be the discretion of the sitting City Council to determine the use of any surplus, as it is currently. Mr. Anderson moved to recommend approval of the proposed financial reforms related to Public Safety, seconded by Mr. Sudler and unanimously carried. Parkway Academy Central School Resource Officer (SRO) Memorandum of Agreement (MOA) Police Chief Paul M. Bernat advised members that in April 2014, Ms. Gail Evans, the Principal of Parkway Academy Central (PAC), met with him to request a School Resource Officer (SRO) at their school, which is located at 111 S. West Street, Suite 200, in Dover (above Duncan Depot Center). He indicated that the PAC is an alternative school for troubled youth who are removed from their traditional schools, such as Caesar Rodney, Polytech, Lake Forest, etc. Members were advised that the PAC just completed its first year of a six (6) year lease at its current location but had been in Dover for the past four (4) years. Chief Bernat indicated that PAC was requesting the presence of one (1) police officer, from 9:00 a.m. to 2:00 p.m., five (5) days per week for its 180-day school year, which equates to 900 work hours. Since a normal work year is 2,080 hours per year, 900 work hours equates to 43% of one (1) work year. He stated that the cost of a new police officer with benefits is approximately $85,000 and that the school is willing to pay $60,000 for the 900 hours of police service. As a result, Chief Bernat stated that an additional $25,000 would be necessary. He proposed to “civilianize” the Sex Offender Unit officers and provided projections, prepared by the Police Resource Manager, of one (1) year and five (5) year savings and payroll costs, including unscheduled over-time, shift-differential, social security, medicare, healthcare insurance, OPEB, etc. (Attachment #1). He noted that the total cost for a police officer, including salary, benefits, training, uniforms, equipment and other costs, is $94,952 and that if the position were civilianized into a Sex Offender Unit position, the total cost would be $49,717, a savings of $45,235 for one (1) year and $262,675 for five (5) years. Chief Bernat stated that the additional $25,000 necessary could easily be made up in the first year simply by civilianizing one (1) Sex Offender Unit position. Chief Bernat also provided members with a Wage and Benefit Information for Employee Hiring and Transfer Request form (Attachment #2) and explained that it indicated exactly how the FY 2015 budget would be affected. He noted that, to date, Chief Hosfelt’s position had not been filled and that Sgt. Fortney was scheduled to retire on August 30, 2014. Chief Bernat indicated that he would also like to send one (1) additional officer (for a total of three (3) officers) to the Delaware State Police Academy, which begins on September 8, 2014. He stated that Sgt. Humphrey had shown an interest in retiring and becoming a sex offender management agent, which would result in a $45,000 savings, and his current position would not be replaced. Chief Bernat reminded members that City Council had approved an authorized strength of 93 officers for the Dover Police Department, and there were currently 92 officers, due to the vacancy created by Chief Hosfelt’s retirement. He noted that, although he recommended three (3) officers

LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE MEETING OF JULY 14, 2014 PAGE 4 for the Delaware State Police Academy, two (2) police officers would be retiring. Chief Bernat indicated that the authorized strength would decrease from 93 to 92 officers, there being one (1) less police officer. Currently, there were 29 civilians in the Police Department, and this would increase to 31 civilians with the hiring of two (2) additional civilians. However, hiring three (3) additional officers would temporarily increase the police officers to 94, since one (1) officer would not yet have retired. In essence, he stated that the Police Department would be trading one (1) police officer for two (2) civilian positions and, as a result, a good deal of money would be saved. Chief Bernat stated that making these changes in the FY 2015 Budget would result in a savings of $16,000. He reiterated that the average savings for civilianizing a police officer position is almost $50,000. Regarding the request of PAC, Chief Bernat explained that a Memorandum of Agreement (MOA) between the PAC and the Police Department would be signed. The agreement would be for three (3) years at $60,000 per year. The agreement could be renewed in its second year; however, the City would also have the option to discontinue the agreement and release the SRO from the position when a police officer retires from the Dover Police Department. Under this scenario, he stated that no replacement would be hired to replace the retiring police officer. Members were advised that the Police Department would be coming back to the Committee in the near future with a full personnel plan that would not exceed the FY 2015 budget. Chief Bernat assured members that this would be a win-win situation and would allow the Police Department to provide real-time police service to the PAC and allow the Department to have an extra uniformed officer available. Staff recommended authorizing the Police Department to sign the MOA with Parkway Academy Central and approval for hiring a police officer for this program. Responding to Mr. Hare, Chief Bernat indicated that the school year for PAC begins August 22, 2014 and runs for 180 school days. As a result, the SRO would be available for other duties outside the hours of 9:00 a.m. to 2:00 p.m., as well as during the summer months, when there is no school. In response to Mr. Sudler, Chief Bernat explained that the SRO would be a full-time, City of Dover police officer who would be paid for 2,080 hours per year, 900 of which would spent working for the school. Mr. Shevock questioned if there were similar arrangements in other schools. Responding, Chief Bernat stated that there are two (2) SROs in the Capital School District and the District provides the City with $50,000 per officer, per year. If any other school located in the City wanted an SRO, they would be required to submit a request to the City. Chief Bernat stated that the Indian River School District provides an SRO Agent who is paid $25 per hour during the school year; however, in addition, they have an SRO.

LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE MEETING OF JULY 14, 2014 PAGE 5 Responding to Mr. Slavin’s concerns regarding whether a “sit-out” period was required before City retirees could return to employment with the City, Mrs. Mitchell stated that staff had requested a legal opinion on this matter since the City’s actuary had once indicated that the hiring of City retirees would violate the City’s Pension Trust. She suggested that no retirees be hired by the City until the legal opinion was received. Elaborating, Mr. Koenig stated that some of the discussion was premature at this time, explaining that it was his hope that complete information would be presented to City Council for consideration; however, the SRO issue for PAC was on a specific time-line and a decision was necessary at this time. He assured members that staff was taking the required steps to ensure that the requested action could occur without any legal ramifications, noting that the City had an extremely unionized environment with 90% of employees unionized. If the requested positions were created, he stated that it would be necessary to determine if they would be non-bargaining or unionized positions. Mr. Koenig stated that staff was interested in the concept, since it would eventually save the City money and allow officers who are familiar with this type of work to fill positions, although the officers would not necessarily be retired City police officers. He mentioned that the negotiations with the American Federation of State, County, and Municipal Employees (AFSCME) had been difficult, specifically because of a City retiree being hired and their selection of certain benefits. Although answers would be required for some of the issues that had been discussed, he stated that, at this time the SRO issue was a contract that required City Council endorsement, noting that an SRO was important for these students and that the program had proven to be beneficial for the community. Mr. Hare explained the need to plan and that certain changes may be necessary. He agreed that there was a need for the SRO at PAC for the betterment of the community and reminded members that there had been much discussion regarding the possibility of civilianizing the Sex Offender Unit positions. To his recollection, the Deputy City Solicitor had provided an opinion indicating that the City had the ability to hire retirees. Responding to Mr. Shevock, Chief Bernat indicated that it takes 22 weeks to complete the Police Academy and that the Academy is provided every six (6) months. He also stated that any retiree hired would not be eligible for another pension from the City. If the three (3) police officers were approved and an opinion was received indicating authorization to civilianize the Sex Offender Unit positions, he assured members that the authorized strength would return to 92. Mr. Hutchison felt that it would be imperative to determine if the retired police officers that would be hired to fill civilian positions would be unionized, explaining the importance of a Police Chief being able to assign a position where necessary and, if unionized, contract issues may prevent this flexibility. Mr. Hare suggested the possibility of the Sex Offender Unit positions being contractual, which would avoid any union issues since these positions would not be filled by employees.

LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE MEETING OF JULY 14, 2014 PAGE 6 Mr. Anderson moved to recommend authorization for the position, that staff’s recommendation be followed, and that the Police Chief and City Manager be authorized to sign the MOA with Parkway Academy Central. The motion was seconded by Mr. Hare. At the request of Mr. Hare, Mr. Anderson clarified that by including approval of staff’s recommendation, his motion included authorization for an additional officer to be hired, resulting in a total of three (3) police officers being sent to the Delaware State Police Academy in September 2014. The motion to recommend authorization for the position, that staff's recommendation be followed, and that the Police Chief and City Manager be authorized to sign the Memorandum of Agreement (MOA) with Parkway Academy Central was unanimously carried. Village at McKee Branch (Formerly Walker Woods) Redevelopment Pay-in-Lieu of Taxes (PILOT) Mr. Scott Koenig, City Manager, advised members that the Milford Housing Development Corporation (MHDC) was proposing the redevelopment of Walker Woods into the Village at McKee Branch. This redevelopment project was working through the approval process so they can reconstruct this area to support current market needs. As part of their project financing support, they are seeking to enter into a Payment-in-Lieu of Taxes (PILOT) agreement with the City of Dover. He assured members that the draft agreement had been reviewed by the Deputy City Solicitor, Mr. William Pepper. The MHDC was proposing a PILOT in the amount of $5,000, prorated for any partial year, with an escalator of two percent (2%) each year. Mr. Koenig noted that the City of Dover property and tax records indicated the combined properties associated with the redevelopment of the Walker Woods Subdivision currently yield a tax levy of $14,058.97 per year. Mr. Koenig stated that he was continuing discussions with the MHDC and that the $5,000 PILOT was the initial offer. He requested permission to continue negotiations, explaining that the $5,000 PILOT would be the lowest amount and that there was a possibility that the amount may increase slightly. He advised members that a similar request was submitted by the MHDC to the Capital School District, as well as to Kent County. Staff recommended that the City Manager be authorized to negotiate a final agreement with MHDC regarding a proposed PILOT for the Village at McKee Branch. Responding to Mr. Sudler, Mr. Russell Huxtable, representative of the MHDC, 977 East Masten Circle, Milford, stated that being located within the City limits the development would be provided police services, fire protection, etc. and MHDC recognized this value to their residents. He stated that MHDC could be exempted from paying taxes and that entering into a PILOT agreement as a mutual understanding between the two (2) parties would not have an impact on the organization’s 501(c)(3) status.

LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE MEETING OF JULY 14, 2014 PAGE 7 Mr. Koenig advised members that the owners of the property would have received street sweeping services, snow plowing, trash pickup, etc.; however, due to the manner in which they proposed to redevelop the property, the roadway will be private. As a result, these types of services will also be private. Mr. Koenig stated that the majority of the services that will be provided by the City will be for police, fire, ambulance, fire marshal, code enforcement, etc. In response to Mr. Anderson, Mr. Koenig stated that the abandonment of the right-of-way in the development was presented and approved by City Council late last year and, since this matter went through the committee process, all City departments commented on the request. Regarding trash services, he explained that when Walker Woods was originally developed, it did not have individualized containers but rather a bank of large, centrally located containers. He stated that this type of arrangement had created difficult issues over the last 20+ years, explaining that in some years trash was put inside the containers; however, there were times when the containers closer to the roadway would overflow. Mr. Koenig stated that the redevelopment of the property would resolve this issue since the City would no longer be providing trash collection services for this property. He noted that there are other developments within the City with private collection, such as Luther Towers. Although there would be a $9,000 reduction in the revenues collected ($14,058.97 property taxes versus $5,000 PILOT), Mr. Koenig assured members that the City would actually realize a savings since City services were being eliminated. Responding to Mayor Christiansen, Mr. Huxtable stated that the MHDC owns several other multi-family housing developments throughout the State, noting that its management takes over such services for all the complexes and they are within the operating budget for the apartment complex. Mr. Hare moved to recommend that the City Manager be authorized to negotiate a final agreement with Milford Housing Development Corporation (MHDC) regarding a proposed PILOT for the Village at McKee Branch, seconded by Mr. Sudler and unanimously carried. One-Year Follow-Up - Disposal of Excess Property - 70 Mifflin Road, 299 College Road, and 29 North Kirkwood Street - Offer from Habitat for Humanity During their Regular Meeting of June 10, 2013, City Council approved the Legislative, Finance, and Administration Committee’s recommendation that it be determined that 70 Mifflin Road, 299 College Road, and 29 North Kirkwood Street were excess properties and that the City Manager be authorized to negotiate sale prices with Habitat for Humanity that minimize the write-off amount for the properties located at 70 Mifflin Road and 29 North Kirkwood Street and that the Standard Method of Disposition of Excess Property (with the possibility of a bid process) be utilized for the property located at 299 College Road. Mr. Scott Koenig, City Manager, provided members with an update on the three (3) properties authorized for disposal, as follows: 70 Mifflin Road – Habitat for Humanity originally offered to purchase the property for $10,000 on May 10, 2013. There was an agreed upon counteroffer on September 5, 2013 in the amount of $12,000. The sale of this property was officially

LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE MEETING OF JULY 14, 2014 PAGE 8 completed on October 8, 2013. The lien amount for the property was $12,175.68, so the City of Dover will write off $175.68. 29 North Kirkwood Street - Habitat for Humanity originally offered to purchase the property for $5,000 on May 10, 2013. There was an agreed upon counteroffer on September 5, 2013 in the amount of $5,800. As of July 8, 2014, the official property transfer had not occurred due to concerns about the deed description in the Sheriff’s deed; however, the Deputy City Solicitor had indicated that the deed is consistent with the Kent County property records. City staff was waiting on an official response from Habitat for Humanity with a specific purchase date. If this purchase is not completed by September 30, 2014, the property will be offered through a public bid. The lien amount for the property was $16,511.12, so the City of Dover will write off $10,711.12, provided the transaction with Habitat for Humanity is completed. 299 College Road – The bid documents for the property have been completed and will be sent to the City’s purchasing agent by July 11, 2014. Bids are to be received in August 2014, with the sale to be completed within 90 days. The lien amount is $17,870.26. Responding to Mr. Sudler, Mr. Koenig stated that, to his knowledge, the property at 299 College Road would be the first property for which the City will let bids to the public, indicating that almost all other properties that the City had transferred had gone to the Central Delaware Habitat for Humanity. Mr. Koenig stated that there was public interest, outside of the Central Delaware Habitat for Humanity, in the property at 299 College Road. Mr. Anderson noted that in some instances when a property is deemed dangerous, it may be less costly to repair it than to demolish it and questioned if staff would consider selling properties for the liens in order for the City to recoup its money. Mr. Koenig stated that, to his recollection, the City had not previously identified property that was in disrepair, taken action to have it repaired, and then had the property put out to public bid. He stated that for all such properties, the owner makes the necessary repairs or the City demolishes the property and goes through the lien process. Mr. Koenig explained that there are some cases where a third party may acquire the property from the original owner and either satisfy the lien or offer a certain amount that is accepted by the City to satisfy the lien. Mrs. Ann Marie Townshend, Director of Planning and Community Development, advised members that she and Deputy City Solicitor Pepper had discussed the possibility of repairing and selling properties that are in disrepair. She explained that the issue was that the only items the City has authority to lien are demolition and exterior repairs. She assured members that the problems with those properties that had been demolished by the City were far worse than exterior repairs; therefore, the City would not have the ability to renovate a property and then place a lien and sell the property. Responding, Mr. Anderson requested that he be provided the legal opinion on this matter, noting that the City Code would allow such action. Mrs. Townshend stated that although such an opinion was

LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE MEETING OF JULY 14, 2014 PAGE 9 voiced by the Deputy City Solicitor, she had not obtained a written legal opinion and further explained that the State statute is very clear regarding those actions that are “lienable;” however, she stated that a written legal opinion would be requested of the Deputy City Solicitor. Due to the foreclosure crisis, Mr. Anderson felt that the City was taking action on more of these properties due to their being a public nuisance rather than because of their state of disrepair. He noted that the City had declared several properties dangerous because they were subject to vandalism and fire hazards and, as a result, the City was losing valuable housing stock. Mr. Anderson moved to recommend acceptance of the follow-up report provided by staff on the disposal of excess properties, seconded by Mr. Sudler and unanimously carried. By unanimous consent, the meeting adjourned at 6:55 p.m. Timothy A. Slavin Chairman TAS/TM/jg/js/dd S:\AGENDAS-MINUTES-PACKETS-PRESENTATIONS-ATT&EXH\Committee-Minutes\2014\07-14-2014 LF&A.wpd Attachments Attachment #1 - One-Year and Five-Year Savings - FY 2015 Police Officer Payroll Costs - Civilianizing Sex Offender Officers Attachment #2 - Wage and Benefit Information for Employee Hiring and Transfer Request

ATTACHMENT #1 LF&A Committee Meeting of 7/14/2014 LF&A Committee Meeting of 7/14/2014 ATTACHMENT #1

ATTACHMENT #2 LF&A Committee Meeting of 7/14/2014 LF&A Committee Meeting of 7/14/2014 ATTACHMENT #2