Attachment

LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE AGENDA FEBRUARY 9, 2015 - 5:45 P.M. CITY HALL COUNCIL CHAMBERS 15 LOOCKERMAN PLAZA DOVER, DELAWARE PUBLIC COMMENTS ARE WELCOMED ON ANY ITEM AND WILL BE PERMITTED AT APPROPRIATE TIMES. WHEN POSSIBLE, PLEASE NOTIFY THE CITY CLERK (736-7008 OR E-MAIL AT CITYCLERK@DOVER.DE.US) SHOULD YOU WISH TO BE RECOGNIZED. AGENDA ADDITIONS/DELETIONS 1. PROPOSED ORDINANCES A. #2015-03 AMENDING CHAPTER 102 - TAXATION, ARTICLE III - REALTY TRANSFER TAX, SECTION 102-71 - DEFINITIONS; ARTICLE IV - ABATEMENT OF REAL ESTATE TAXES, SECTION 102-113 - QUALIFICATIONS; AND ARTICLE V - TAX CREDITS FOR HISTORIC PROPERTIES, SECTION 102-152 - APPLICATION REQUIREMENTS AND SECTION 102-153 - APPLICATION REVIEW AND APPROVAL (SPONSORS: ANDERSON, BONAR, SLAVIN, AND TOWNSHEND) (STAFF RECOMMENDS ADOPTION OF THE PROPOSED ORDINANCE AMENDMENTS) (DUE TO TIME CONSTRAINTS, THIS ITEM HAS BEEN PLACED ON THE COUNCIL AGENDA FOR THE MEETING BEING HELD LATER IN THE EVENING) B. #2015-04 AMENDING APPENDIX C - DOWNTOWN REDEVELOPMENT (SPONSORS: ANDERSON, BONAR, SLAVIN, AND TOWNSHEND) (STAFF RECOMMENDS ADOPTION OF THE PROPOSED ORDINANCE AMENDMENTS) (DUE TO TIME CONSTRAINTS, THIS ITEM HAS BEEN PLACED ON THE COUNCIL AGENDA FOR THE MEETING BEING HELD LATER IN THE EVENING) C. #2015-05 FISCAL YEAR 2015 SECOND BUDGET AMENDMENT (STAFF RECOMMENDS ADOPTION OF THE PROPOSED BUDGET AMENDMENTS FOR FISCAL YEAR 2015 AND CONSIDERATION OF THE RECOMMENDATION TO REPLENISH THE CONTINGENCY RESERVE $300,000 AND TRANSFER $85,000 TO THE CAPITAL ASSET RESERVE) 2. COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) FOR THE FISCAL YEAR ENDING JUNE 30, 2014 (COMMITTEE ACTION NOT REQUIRED) 3. REVIEW OF TRAINING, CONFERENCE, AND TRAVEL POLICY (DEFERRED ON JANUARY 12, 2015 DUE TO TIME CONSTRAINTS) (STAFF RECOMMENDS APPROVAL OF THE PROPOSED AMENDMENTS TO THE POLICY)

LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE AGENDA - FEBRUARY 9, 2015 PAGE 2 4. REVIEW OF EFFECTIVENESS OF THE SAFE COMMUNITIES ORDINANCE (REQUEST OF COUNCILMAN ANDERSON) (DEFERRED ON JANUARY 12, 2015 DUE TO TIME CONSTRAINTS) 5. AUTOMATIC ESCALATOR FOR BUILDING-RELATED PERMIT FEES (REFERRED TO STAFF DURING THEIR MEETING OF AUGUST 11, 2014) (REQUEST OF COUNCILMAN ANDERSON) 6. PROPOSED RESOLUTION NO. 2015-01 - DOVER PROSPERS INITIATIVE (ECONOMIC GREENING) (REQUEST OF COUNCILMAN ANDERSON) 7. FREEDOM TO WORSHIP ACT (TO ADDRESS ZONING INEQUITIES FOR PLACES OF ASSEMBLY) (REQUEST OF COUNCILMAN ANDERSON) 8. UPDATES (DEFERRED ON JANUARY 12, 2015 DUE TO TIME CONSTRAINTS) A. CERTIFIED LOCAL GOVERNMENT APPLICATION (STAFF RECOMMENDS APPROVAL OF THE APPLICATION AND THAT THE APPLICATION BE FORWARDED TO THE STATE HISTORIC PRESERVATION OFFICE, ACCOMPANIED BY A LETTER FROM THE MAYOR) B. “SAFE WHISTLES” NATIONAL RECREATION AND PARK ASSOCIATION RECOMMENDED GUIDELINES FOR CREDENTIALING VOLUNTEERS (BACKGROUND SCREENING FOR YOUTH COACHES AND SPORTS OFFICIALS FOR ALL CITY RECREATION OFFERINGS) (DURING THEIR MEETING OF NOVEMBER 25, 2013, COUNCIL APPROVED THE COMMITTEE’S RECOMMENDATION THAT BACKGROUND CHECKS BE PERFORMED FOR ALL PARKS AND RECREATION VOLUNTEERS AND CONTRACTORS, INCLUDING OFFICIALS, WHO WILL BE WORKING DIRECTLY WITH YOUTH, EVERY THREE (3) YEARS, AND THAT STAFF IMPLEMENT A STAGGERED APPROACH THAT WOULD REQUIRE COMPLIANCE BY OFFICIALS BY A CERTAIN DATE IN 2014) 9. ADJOURNMENT BY 7:10 P.M. /TM S:\AGENDAS-MINUTES-PACKETS-PRESENTATIONS-ATT&EXH\COMMITTEE-AGENDAS\2015\02-09-2015 LF&A.WPD THE AGENDA ITEMS AS LISTED MAY NOT BE CONSIDERED IN SEQUENCE. THIS AGENDA IS SUBJECT TO CHANGE TO INCLUDE THE ADDITION OR THE DELETION OF ITEMS, INCLUDING EXECUTIVE SESSIONS.

FIRST READING CITY OF DOVER PROPOSED ORDINANCE #2015-03 1 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL 2 MET: 3 That Chapter 102 - Taxation, Article III - Realty Transfer Tax, Section 102-71 - Definitions of the Dover 4 Code be amended by deleting the text indicated in bold, red strikeout and inserting the bold, blue text, as 5 follows: 6 Sec. 102-71. - Definitions. 7 (a) The following words, terms and phrases, when used in this article, shall have the meanings ascribed 8 to them in this section, except where the context clearly indicates a different meaning: 9 (1) Document means any deed, instrument or writing whereby any real estate within the corporate 10 limits of the city, or any interest therein, shall be quitclaimed, granted, bargained, sold or 11 otherwise conveyed to the grantee, but shall not include the following: 12 a. Any will; 13 b. Any lease other than those described or defined in subsection (a)(2) of this section; 14 c. Any mortgage; 15 d. Any conveyance between corporations operating housing projects pursuant to 31 Del. C. § 16 4501 et seq., and the shareholders thereof; 17 e. Any conveyance between nonprofit industrial development agencies and industrial 18 corporations purchasing from them; 19 f. Any conveyance to nonprofit industrial development agencies; 20 g. Any conveyance between a husband and wife; 21 h. Any conveyance between persons who were previously husband and wife, but who have 22 since been divorced, provided that such conveyance is made after the granting of the final 23 decree in divorce and the real estate or interest therein subject to such conveyance was 24 acquired by the husband and wife, or husband or wife prior to the granting of the final 25 decree in divorce; 26 i. Any conveyance between parent and child or the spouse of such a child; 27 j. Any conveyance: 28 1. To a trustee, nominee or straw party for the grantor as beneficial owner; 29 2. For the beneficial ownership of a person, other than the grantor, where, if such person 30 were the grantee, no tax would be imposed upon the conveyance pursuant to this 31 chapter; or 32 3. From a trustee, nominee or straw party to the beneficial owner; 33 k. Any conveyance between a parent corporation and a wholly owned subsidiary corporation, 34 provided that such conveyance is without actual consideration; 35 l. Correctional deeds without actual consideration;

Proposed Ordinance #2015-03 - Chapter 102 - Taxation Page 2 36 m. Any conveyance to or from the United States, this state or to any of their instrumentalities, 37 agencies or political subdivisions and the University of Delaware; 38 n. Any conveyance to or from a corporation, or a partnership, where the grantor or grantee 39 owns stock of the corporation or an interest in the partnership in the same proportion as his 40 interest in, or ownership of, the real estate being conveyed; provided, however, that this 41 subsection shall not apply to any distribution in liquidation or other conveyance resulting 42 from the partial or complete liquidation of a corporation, unless the stock of the 43 corporation being liquidated has been held by the grantor or grantee for more than three 44 years; provided, further, this subsection shall not apply to any conveyance from a 45 partnership to its partners, unless the partners' interest in the partnership has been held for 46 more than three years; 47 o. Any conveyance by the owner or previously occupied residential premises to a builder of 48 new residential premises when such previously occupied residential premises are taken in 49 trade by such builder as a part of the consideration from the purchaser of new, previously 50 unoccupied premises; 51 p. Any conveyance to the lender holding a bona fide mortgage, which is genuinely in default, 52 either by a sheriff conducting a foreclosure sale, or by the mortgagor in lieu of foreclosure; 53 q. Any conveyance to a religious organization or other body or person holding title to real 54 estate for a religious organization, if such real estate will not be used following such 55 transfer by the grantee, or by any privy of the grantee, for any commercial purpose; 56 provided, however, that only that portion of the tax which is attributable and payable by the 57 religious organization or other body or person holding title to real estate for a religious 58 organization under 30 Del. C. § 5402 shall be exempt; 59 r. Any conveyance to or from a volunteer fire company organized under the laws of this state; 60 provided, however, that only that portion of the tax which is attributable to and payable by 61 the volunteer fire company by this article shall be exempt; 62 s. Any conveyance of a "mobile home," as defined in 25 Del. C. § 7003; 63 t. Any conveyance without consideration to an organization exempt from tax under section 64 501(c)(3) of the federal Internal Revenue Code (26 USC 501(c)(3)); 65 u. Any conveyance to a nonprofit conservation organization, when the property is purchased 66 for open space preservation purposes; 67 v. Any conveyance to or from a nonprofit corporation or organization of real estate acquired 68 for the purpose of rehabilitation and resale without profit. 69 (2) Document includes the following: 70 a. Any writing purporting to transfer a title interest or possessory interest for a term of more 71 than five years in a condominium unit or any unit properties subject to the Unit Property 72 Act pursuant to 25 Del. C. § 2201 et seq. 73 b. Any writing purporting to transfer a title interest or possessory interest of any lessee or 74 other person in possession of real estate owned by the state or other political subdivision 75 thereof. 76 c. Any writing purporting to assign or transfer a leasehold interest or possessory interest in 77 residential property under a lease for a term of more than five years. For this purpose, the 78 term "residential property" means any structure or part of a structure which is intended for

Proposed Ordinance #2015-03 - Chapter 102 - Taxation Page 3 79 residential use, and excluding any commercial unit subject to tax under 30 Del. C. § 80 2301(a)(88) relating to commercial lessors. 81 (3) First-time homebuyer means a natural person who has at no time held an interest in residential 82 real estate, wherever located, and which has been occupied as their principal residence, and 83 who intends to occupy the property being conveyed as his principal residence, within 90 days 84 following recordation of the deed. The first-time homebuyer must file an affidavit certifying to 85 his qualifications before the exemption can be granted. In order to alleviate claims for rebate of 86 the transfer tax paid, no rebate shall be made once the deed for the transaction has been 87 recorded. First-time homebuyers submitting a false affidavit in any respect, which would entitle 88 them to the exemption, shall be subject to payment of the unpaid transfer tax, plus interest at 89 the rate of one and one-half percent per month and, upon direction by the council, referral to the 90 attorney general of the state for criminal prosecution. This subsection shall apply to all real 91 estate settlements held on or after January 2, 2000. First-time homebuyers are exempt from the 92 transfer tax as provided herein. The first-time homebuyer exemption shall apply to the seller of 93 property that qualifies for the first-time buyer exemption but only for property located within 94 the downtown redevelopment high priority target area defined in Appendix C situated in 95 the area from Mary Street to Loockerman Street and Governors Avenue to West Street. 96 Council shall have the right to deny this exemption to any property owner where the sale and 97 purchase appears to be done fraudulently to take advantage of the realty transfer tax exemption 98 ordinance. 99 (4) Transaction means the making, executing, delivering, accepting or presenting for recording of a 100 document. 101 (5) Value means, in the case of any document granting, bargaining, selling or otherwise conveying 102 any real estate or interest or leasehold interest therein, the amount of the actual consideration 103 therefor, including liens or other encumbrances thereon, and ground rents which encumber the 104 interest in real estate and any other interest in real estate conveyed, provided, that, in the case of 105 a transfer for an amount less than the highest appraised full value of said property for local real 106 property tax purposes, the term "value" shall mean the highest such appraised value, unless the 107 parties or one of them can demonstrate that fair market value is less than the highest appraised 108 value, in which case, the term "value" shall mean fair market value, or actual consideration, 109 whichever is greater. A demonstration that the transaction was at arm's length between 110 unrelated parties shall be sufficient to demonstrate that the transaction was at fair market value. 111 (b) In determining the term of a lease, it shall be presumed for the purpose of computing the lease term, 112 that any rights or options to renew or extend will be exercised. 113 (c) For the purpose of subsection (a)(5) of this section, in the case of a document described in 114 subsection (a)(2) of this section under which the consideration is based, in whole or in part, on a 115 percentage of the income or receipts to be received in the future, actual consideration shall include 116 the amounts actually received under such percentage of income or receipts provision; provided, 117 however, and notwithstanding any other provisions of this article, that the tax imposed by this 118 article shall be due and payable to the controller/treasurer within 30 days after the date such amounts 119 become due and payable under the agreement. 120 (d) Transfers through conveyance of interest. 121 (1) Except as provided in subsections (d)(2) and (3) of this section, where beneficial ownership in 122 real estate is transferred through a conveyance or series of conveyances of intangible interests in 123 a corporation, partnership or trust, such conveyance shall be taxable under this article as if such

Proposed Ordinance #2015-03 - Chapter 102 - Taxation Page 4 124 property were conveyed through a duly recorded "document" as defined in subsection (a)(1) of 125 this section, and subject to the exemptions contained therein, except those exemptions 126 contained in subsections (a)(1)j. and (a)(1)n. of this section. 127 (2) No bona fide pledge of stock or partnership interests as loan collateral, nor any transfer of 128 publicly traded stock or publicly traded partnership interest shall be deemed subject to taxation 129 under this subsection (d). 130 (3) Where the beneficial owners of real property, prior to the conveyance or series of conveyances 131 referred to in this subsection (d), own 80 percent or more of the beneficial interest in the real 132 estate following said conveyance or series of conveyances, such transfers shall not be subject to 133 tax under this subsection (d). Where the beneficial owners of real property, prior to the 134 conveyance or series of conveyances referred to in this subsection (d), own less than 80 percent 135 of the beneficial interest in the real estate following said conveyance or series of conveyances, 136 such transfers shall not be subject to tax under this subsection (d), unless under regulations 137 promulgated by the city assessor, such transfer or transfers are properly characterized as a sale 138 of real property. Such characterization shall take into account the timing of the transaction, 139 beneficial ownership prior to and subsequent to the conveyance or conveyances, the business 140 purpose of the corporation, partnership or trust, and such other factors as may be relevant. 141 (Code 1981, § 19.5-19; Ord. of 6-27-1988; Ord. of 4-22-1996; Ord. of 8-10-1998; Ord. of 12-13- 142 1999; Ord. of 8-8-2005(1); Ord. No. 2009-23, 10-26-2009; Ord. No. 2011-17, 8-8-2011) 143 BE IT FURTHER ORDAINED: 144 That Chapter 102 - Taxation, Article IV - Abatement of Real Estate Taxes, Section 102-113 - 145 Qualifications of the Dover Code be amended by deleting the text indicated in red strikeout and inserting 146 the bold, blue text, as follows: 147 Sec. 102-113. - Qualifications. 148 (a) Definitions. The following words, terms and phrases, when used in this section, shall have the 149 meanings ascribed to them in this subsection, except where the context clearly indicates a different 150 meaning: 151 Control with respect to a corporation means ownership, directly or indirectly, of stock possessing 152 50 percent or more of the total combined voting power of all classes of the stock of such 153 corporation entitled to vote and 50 percent or more of the shares of such corporation entitled to 154 vote and 50 percent or more of the total number of shares of all other classes of such corporation's 155 stock. 156 Control with respect to a trust means ownership, directly or indirectly, of 50 percent or more of the 157 beneficial interest in the principal or income of such trust. The ownership of stock in a corporation, 158 of a capital of profits interest in a partnership or association, or of a beneficial interest in a trust 159 shall be determined in accordance with the rules for constructive ownership of stock provided in 160 section 267(c) of the Internal Revenue Code (26 USC 267(c)). 161 Expanded facility means any qualified property that is modified with an improvement or addition 162 (other than a replacement resulting from the acquisition, construction, reconstruction, installation, 163 or erection of improvements or additions resulting from repairing, refurbishing, retooling, 164 recycling, or other similar process or procedure that merely preserves or restores the value of an

Proposed Ordinance #2015-03 - Chapter 102 - Taxation Page 5 165 existing facility and not including any improvement or addition that, in the determination of the 166 council, does not constitute an integral part of a qualified activity), if such improvements or 167 additions are placed in service by the taxpayer after January 1, 2001. Abatement will only be to the 168 extent of the taxpayer's qualified investment in such improvements or additions. 169 Large vacant commercial facility means a building of 20,000 square feet or larger and vacant 170 continuously for 18 months or more. 171 New facility means any qualified facility (other than an expanded facility or a replacement facility) 172 constructed by the taxpayer after January 1, 2001. For the purposes of this article, the term 173 "constructed" means the issuance of a building permit for $1,000,000.00 or more with regards to 174 subsection (b)(1) of this section, and the issuance of a building permit for $3,000,000.00 or more 175 with regards to subsection (b)(2) of this section. 176 Placed in service and original use have the meanings ascribed to such terms under section 167 of 177 the Internal Revenue Code (26 USC 167) and regulations promulgated thereunder. 178 Qualified activity means any activity constituting manufacturing (other than any repair, 179 refurbishing, retooling, recycling or other similar process or procedure that merely preserves or 180 restores the value of a product or that does not change the inherent nature of a product or material). 181 Such term includes any activity engaging in business as a wholesaler; the CCBA and any 182 subsequent legislation as enacted by the state; any home offices and operating units of insurance 183 companies; and any combination of activities described herein. 184 Qualified employee means any person employed within the city/county on a regular and full-time 185 basis. 186 Qualified facility means any qualified property located in the city that constitutes a new or an 187 expanded facility, located within the industrial park manufacturing district, industrial park 188 manufacturing 2 district, or manufacturing district, and that is used by a taxpayer in or in 189 connection with a qualified activity. 190 Qualified investment for any taxable year is based on the value of a qualified facility as of the last 191 business day of such taxable year. 192 Qualified property means any building and its structural components, and any other improvement 193 to real property. Such term includes the land on which such building or other improvements are 194 located, if ownership of said land and structural improvements is identical. If any property is 195 owned or leased by the taxpayer in common with any other person or persons, such property may 196 constitute "qualified property" only to the extent of the taxpayer's proportionate interest. 197 Related person means a corporation, partnership, association, or trust controlled by the taxpayer; or 198 an individual, corporation, partnership, association, or trust that is in control of the taxpayer; or a 199 corporation, partnership, association, or trust controlled by an individual, corporation, partnership, 200 association, or trust that is in control of the taxpayer. 201 (b) Established. Industries/businesses may qualify for property tax abatement either by meeting the 202 industry function qualifications detailed in the following subsection (b)(1) or the investment 203 qualifications detailed in the following subsection (b)(2) or the occupancy qualifications detailed in 204 the following subsection (b)(3):

Proposed Ordinance #2015-03 - Chapter 102 - Taxation Page 6 205 (1) Qualifying industries/businesses by function. 206 a. Manufacturers and financial institutions as defined by the FCDA, CCBAA, and subsequent 207 legislation and home offices and operating units of insurance companies shall be qualifying 208 industries, including, but not be limited to, distributors, transportation (air, rail, barge, 209 truck), printing and publishing, and food processing. 210 b. Investment and employees. The qualifying industry must invest at least $1,000,000.00 in a 211 qualifying new or expanded facility in the city and hire at least 20 qualified employees 212 (including owners/operators), 75 percent of whom shall be city/county residents not 213 employed by the qualifying industry/activity at the time of its relocation/expansion within 214 the city. The council may, at the time of application, reduce the 75 percent requirement to a 215 lesser percentage, but not less than 50 percent. The qualifying industry agrees to supply 216 information verifying compliance with this section in whatever legally acceptable manner 217 the council shall so request. 218 (2) Qualifying industry/businesses by investment. Industries/businesses that do not meet the 219 qualifications as specified in subsection (b)(1) of this section can nevertheless qualify for 220 property tax abatement by investing a minimum of $3,000,000.00 in a new or expanded facility 221 in the city located within the industrial park manufacturing district, industrial park 222 manufacturing 2 district, or the manufacturing district, and hire at least 15 qualified employees 223 (including owners/operators), 75 percent of whom shall be city/county residents not employed 224 by the qualifying industry/activity at the time of its relocation/expansion within the city. The 225 council may, at the time of application, reduce the 75 percent requirement to a lesser 226 percentage, but not to less than 50 percent. The qualifying industry agrees to supply information 227 verifying compliance with this section in whatever legally acceptable manner the council shall 228 so request. 229 (3) Qualifying industry/business by occupying a large vacant commercial facility. Entities that do 230 not qualify for property tax abatement under subsection (b)(1) or (b)(2) can qualify for property 231 tax abatement by (a) purchasing a large vacant commercial facility if the purchase of the large 232 vacant commercial facility will result in the employment of 15 or more full-time employees; or 233 (b) leasing a large vacant commercial facility if the initial lease term is at least ten years, the 234 lease of the large vacant commercial facility will result in the employment of 15 or more full- 235 time employees, and the occupying tenant submits a letter of intent to lease and requests the 236 abatement for either their own benefit when the tax burden is the responsibility of the tenant, or 237 on behalf of the owner when the tax burden is the responsibility of the owner. The demolition 238 of a large vacant building and the construction of a new replacement 20,000 square feet or 239 greater that meets the conditions of [subsection] (b)(3) of section 102-113, Qualifications, shall 240 qualify for abatement. 241 (c) Benefits. 242 (1) The council may abate city real estate taxes on a ten-year sliding scale as follows, or upon any 243 other scale or method deemed most advantageous by the council for the public welfare: 244 Fiscal Year Construction Ended ..... 100 percent reduction of taxes 245 First year of operation ..... 90 percent reduction of taxes 246 Second year of operation ..... 80 percent reduction of taxes 247 Third year of operation ..... 70 percent reduction of taxes 248 Fourth year of operation ..... 60 percent reduction of taxes

Proposed Ordinance #2015-03 - Chapter 102 - Taxation Page 7 249 Fifth year of operation ..... 50 percent reduction of taxes 250 Sixth year of operation ..... 40 percent reduction of taxes 251 Seventh year of operation ..... 30 percent reduction of taxes 252 Eighth year of operation ..... 20 percent reduction of taxes 253 Ninth year of operation ..... 10 percent reduction of taxes 254 Tenth year of operation ..... 0 percent reduction of taxes 255 (2) Unless otherwise directed by the council, year one of the abatement period will commence with 256 the first property tax billing following the completion of the qualifying new or expanded facility 257 and the meeting of all requirements as detailed in subsections (b)(1) and (b)(2) of this section. 258 Abatement for expanded facilities will be limited to expansion value only. 259 (3) All quarterly property taxes for new construction, as defined in section 49A of the city Charter, 260 will likewise be abated for qualifying new or expanded facilities. 261 (4) The property tax abatement program will have no effect on both citywide revaluations of 262 property values for taxation purposes and the institution of those new values. 263 (d) Any persons purchasing residential real property in which they will reside within the downtown 264 redevelopment high priority target area defined in Appendix C area defined as Mary Street to 265 Loockerman Street and Governors Avenue to West Street shall be given tax relief from the 266 payment of real estate taxes in the following manner: first year of ownership, total tax abatement; 267 second year of ownership, 75 percent tax abatement; third year of ownership, 50 percent tax 268 abatement; fourth year of ownership, 25 percent tax abatement; fifth year of ownership, no tax 269 abatement. Provided however that the homeowner is required to occupy the home as their principal 270 place of residence during the entire time that the taxes are abated and if the property ceases to be 271 their principal place of residence at any time during the four-year period of abatement, then they 272 shall lose their right of abatement and shall be required to pay immediately all taxes abated up to the 273 time that the home ceases to be their principal residence. In order to obtain the tax abatement, the 274 homeowner must make application by affidavit submitted to the city clerk showing qualification for 275 the abatement and each year thereafter, submit a similar affidavit showing their continued right to 276 the abatement. If qualification for the abatement ceases within the four-year period of abatement the 277 homeowner is required to notify the city clerk of the lack of qualification for the abatement and 278 within 90 days from the date the qualification ceases, pay all taxes abated in the past. 279 First year of owner occupancy ..... 100 percent reduction of taxes 280 Second year of owner occupancy ..... 75 percent reduction of taxes 281 Third year of owner occupancy ..... 50 percent reduction of taxes 282 Fourth year of owner occupancy ..... 25 percent reduction of taxes 283 Fifth year of owner occupancy ..... 0 percent reduction of taxes 284 285 (Code 1981, § 19.5-33; Ord. of 12-11-2000; Ord. of 8-8-2005(3); Ord. No. 2011-11, 7-11-2011; 286 Ord. No. 2011-17, 8-8-2011)

Proposed Ordinance #2015-03 - Chapter 102 - Taxation Page 8 287 BE IT FURTHER ORDAINED: 288 That Chapter 102 - Taxation, Article V - Tax Credits for Historic Properties, Section 102-152 - 289 Application Requirements and Section 102-153 - Application Review and Approval of the Dover Code 290 be amended by deleting the text indicated in red strikeout and inserting the bold, blue text, as follows: 291 Sec. 102-151. - Voluntary tax credits for preservation, restoration, and/or rehabilitation. 292 Owners of historic properties located in the city historic district zone, as shown on the city zoning 293 map, or properties listed on the National Register of Historic Places may be entitled to tax credits for 294 preservation, restoration, and/or rehabilitation of the exterior architectural facades of their buildings, 295 subject to the following special procedures and requirements: 296 (1) Applicability. Tax credits shall be applicable only for preservation, rehabilitation, and/or 297 restoration of exterior architectural improvements which are not covered by insurance claims 298 due to recent damage of the property. 299 (2) Amount. Tax credits shall be provided at 50 percent of the total cost of the approved 300 preservation, restoration, and/or rehabilitation, up to a maximum credit of $6,000.00 (with a 301 total project cost minimum of $12,000.00). The cost of the project must be at least $1,200.00, 302 resulting in a minimum tax credit for the project of $600.00. 303 (3) Run with property. Tax credits shall run with the property for a ten-year period. However, the 304 credit shall not transfer to any new owners of the property. 305 (4) Prorated. Tax credits shall be prorated over the ten-year period. For example, a $6,000.00 306 credit shall be applied in $600.00 increments each year toward a property owner's city real 307 estate tax. If the credit is less than the annual tax due on a property, the owner shall pay the 308 difference to the city through the real estate billing process. If the credit is more than the annual 309 tax due on a property, the owner's credit shall be deemed to be equivalent to the annual tax due. 310 (5) Total credit. The owners of a property may apply more than once for tax credits; however, the 311 total credit shall not exceed $600.00 per year in any given year, and a property may not receive 312 a total abatement greater than $12,000.00. 313 Sec. 102-152. - Application requirements. 314 (a) Submissions to city planner historic district commission. Property owners shall submit a historic 315 tax credit application, and, when applicable, a building permit application and/or application for 316 architectural review certificate to the city planner historic district commission. 317 (b) When submitted. The application and related information shall be submitted to the city 318 planner at least 30 days prior to the historic district commission meeting at which review or 319 approval is requested. 320 (c b) Plans. A tax credit request submittal shall include the type and number of plans and 321 specifications required for a building permit and, in addition, elevation plans and specifications, 322 showing the impact of the proposed work on the exterior architectural facade of the building. 323 (d c) Photographs. A tax credit application submittal shall include current color photographs of the 324 property, showing the present condition of the property, and accurately representing the existing 325 materials and texture. All photographs shall be labeled indicating the direction of view. 326 (e d) Other information. Other information may be required by the city planner to facilitate review of 327 such tax credit submittal.

Proposed Ordinance #2015-03 - Chapter 102 - Taxation Page 9 328 (f e) Cost estimate. An itemized cost estimate shall be submitted, which shall be the basis for the tax 329 credit. 330 Sec. 102-153. - Application review and approval. 331 (a) Factors considered. The city planner historic district commission shall first review the submitted 332 applications, plans, photos, and related information to determine if the property is a qualifying 333 historic property. In making this determination, the city planner commission shall consider the 334 following: 335 (1) The property's significant value as part of the historical, cultural, artistic, social, ethnic or other 336 heritage of the nation, state or city; 337 (2) The property's association with an important person or event in national, state, or local history; 338 (3) Whether the property is representative of the distinguishing characteristics of an architectural 339 type inherently valuable for the study of a period, style, craftsmanship, method of construction 340 or use of an indigenous material; 341 (4) Whether the property is the notable work of a master builder, designer, architect, or artist whose 342 individual genius has influenced an era. 343 (b) Review. If the city planner historic district commission determines that the property is a 344 qualifying property, they shall review the submitted application plans, specifications, and related 345 information for compliance with the following: 346 (1) The proposed application constitutes an exterior preservation project seen readily from a street, 347 sidewalk, or public way, where measures are applied to sustain the existing form, integrity, and 348 material of the building or structure, including stabilization work, where necessary, as part of 349 ordinary maintenance and repair; 350 (2) The proposed application constitutes an exterior rehabilitation project readily seen from a street, 351 sidewalk or public way, which would return the property to a state of utility through repair or 352 alteration which makes possible an efficient use of the building, while preserving those portions 353 or features of the property which are central to its historic, architectural, and cultural 354 significance; 355 (3) The proposed application constitutes an exterior restoration project readily seen from a street, 356 sidewalk, or public way, which accurately recovers the form and detail of a property and its 357 setting as it appeared at a particular period of time in the past by means of removal of later 358 work or by the replacement of missing earlier work; or 359 (4) The proposed application conforms with the recommended practices and treatments of the 360 design standards and guidelines for the city historic district. Practices and treatments designated 361 as not recommended or inappropriate in the guidelines, or determined by the historic district 362 commission to be inappropriate shall not qualify for this tax credit. 363 (c) Referral to historic district commission. The city planner may refer any application for tax 364 credits under this article to the historic district commission for consultation with the 365 commission. The applicant shall have the right to appeal a tax credit disapproval to city 366 council. Vote on approval. The historic district commission, after reviewing whether the 367 proposed project is eligible and conforming with the requirements of these sections, shall, by a 368 majority vote of members present at a publicly held meeting, approve, approve with 369 conditions, or disapprove the tax credit request. The applicant shall have the right to appeal a 370 tax credit disapproval to the city council.

Proposed Ordinance #2015-03 - Chapter 102 - Taxation Page 10 371 (d) Expense report. Upon the completion of the qualified work for which a tax credit has been 372 approved, the property owner or his contractor shall submit to the city planner a written expense 373 report, which verifies the costs associated with the project and shall request an inspection of the 374 completed work by the city planner. 375 (e) Tax credits. The tax assessor shall apply approved tax credits during the fiscal year subsequent to 376 the submittal to the city planner by the applicant of the contractor's final invoice to verify the cost of 377 the repairs to the building and following certification from the city planner that the work has been 378 completed in accordance with the approval of the historic district commission tax credit 379 application, building permit, and/or architectural review certificate. 380 Secs. 102-154—102-180. - Reserved. 381 ADOPTED: * 382 S:\ORDINANCES\2015\DRAFT\Ordinance #2015-03 - Chp 102 - Taxation 02-09-15 First Reading.wpd 383 SYNOPSIS 384 The amendments change the homeownership tax incentives to align with the Downtown 385 Development District boundary and change the City's Historic Property Tax Credit application to 386 be administratively reviewed. 387 (SPONSORS: ANDERSON, BONAR, SLAVIN, AND TOWNSHEND) 388 Actions History 389 02/09/2015 - Scheduled for Introduction at Legislative, Finance, and Administration Committee and 390 First Reading at City Council 391 01/26/2015 - Scheduled for Introduction at Legislative, Finance, and Administration Committee - 392 Meeting Cancelled Due to Inclement Weather

FIRST READING CITY OF DOVER PROPOSED ORDINANCE #2015-04 1 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL 2 MET: 3 That Appendix C - Downtown Redevelopment of the Dover Code be amended by deleting the text indicated 4 in red strikeout and inserting the bold, blue text, as follows: 5 ARTICLE I. - INTENT 6 The city council has deemed it to be in the best interests of the residents of the city and in 7 furtherance of their health, safety and welfare to promote the redevelopment of downtown Dover. In 8 order to promote the redevelopment, [the] council has determined that incentives in the forms of tax 9 abatements, impact fee waivers and building permit caps should be offered. 10 ARTICLE II. - DEFINITIONS 11 The following words, terms and phrases, when used in this ordinance, shall have the meanings ascribed 12 to them in this article, except where the context clearly indicates a different meaning: 13 Section 1. - Beneficiary of the incentives. 14 The beneficiary of the incentives shall include the person or artificial entity that receives the 15 incentive and the owner of one-half or greater interest in an artificial entity that receives the incentive. 16 Section 2. - Downtown Dover Partnership. 17 The Downtown Dover Partnership shall be established for the purpose of fostering redevelopment 18 within the target area. 19 Section 3. - Eligible project. 20 Eligible project shall mean a new construction or renovation which: 21 (a) Is located within the target area; and 22 (b) The fair market value of the materials to be used in and the labor to be performed on the project 23 exceeds the sum of $15,000.00; and 24 (c) Is for commercial, office, or a residential use; and 25 (d) Conforms to the intent of this ordinance. 26 In order for a residential use to be an eligible project, the object of the construction or renovation must 27 be a dwelling unit as defined in article 12 of the City of Dover zoning ordinance [appendix B]. 28 Construction or renovation of accessory buildings as defined in article 12 of the City of Dover zoning 29 ordinance [appendix B] shall not be eligible for development incentives. Construction or renovation 30 which constitutes ordinary replacement or routine maintenance shall not qualify as an eligible project.

Proposed Ordinance #2015-04 - Appendix C - Downtown Redevelopment Page 2 31 Section 4. - Target area. 32 Target area shall mean that part of the city more particularly described as follows: 33 Beginning at a point at the intersection of the centerlines of Cecil and North State Streets, then 34 continuing on the centerline of North State Street in a southerly direction to the intersection of the 35 centerline of State Street and an extension of the centerline of Delaware Avenue, then continuing on 36 the centerline and an extension of the centerline of Delaware Avenue in an easterly direction to the 37 point of intersection of an extension of the centerline of Delaware Avenue and the St. Jones River, 38 then following the centerline of the St. Jones River in a southerly direction to the point of 39 intersection of the centerline of the St. Jones River and the southerly property line of lands now or 40 formerly of the Catholic Diocese of Wilmington, being the site of Holy Cross Roman Catholic 41 Church, then proceeding in a westerly direction along said property line to the easterly right-of-way 42 line of South State Street (U.S. Route 13-A), then crossing the right-of-way line of South State 43 Street in a westerly direction and joining the centerline of Hope Street and proceeding in a westerly 44 direction to the centerlines of Hope Street and South Governors Avenue, then proceeding in a 45 southerly direction along the centerline of South Governors Avenue to the point of intersection of 46 the centerlines of South Governors Avenue and Dover Street, then proceeding in a westerly 47 direction along the centerline of Dover Street to the point of intersection of the centerlines of Dover 48 Street and Westview Terrace, then continuing in a northerly direction on the centerline of Westview 49 Terrace to the point of intersection of the centerline of Westview Terrace and New Burton Road, 50 then proceeding in a northeasterly direction on the centerline of New Burton Road to the point of 51 intersection of New Burton Road and West Street, then continuing in a northerly direction along the 52 westerly right-of-way line of West Street to the point of intersection of the westerly side of the right- 53 of-way of West Street and the northerly property line of lands now or formerly of Dover Rent-All, 54 Inc., then continuing in a westerly direction along said property line to the point of intersection of 55 said property line and the lands of Conrail Railroad, then proceeding in a northerly direction along 56 the easterly right-of-way line of Conrail Railroad in a northerly direction to the point of intersection 57 of the centerline of West North Street and then westerly along the centerline of West North Street to 58 Clarence Street and north along the center line of Clarence Street to Slaughter Street, and 59 west along the center line of Slaughter Street to Cherry Street and north along the center line 60 of Cherry Street to the intersection with the center line of Lincoln Street to a point of 61 intersection with an extension of the westerly property line of lands now or of late of Michael Nash, 62 being the site of the former Diamond Ice Company, then proceeding in a northerly direction along 63 the westerly property line of the Nash property and in a line extending to the intersection of the 64 southerly property line of lands now or of late Paul T. and Aiko Moore, and then northwesterly and 65 then northerly along the southern and western property line of the Moore property and extending 66 north to an intersection with the centerline of Lincoln Street, and then easterly along the centerline 67 of Lincoln Street to a point of intersection of an extension of the westerly property line of lands now 68 or formerly of Frank Moore et al., and then northerly along the western property of Frank Moore et 69 al. and extending to a point of intersection with the centerline of Forest Street, then easterly along 70 the centerline of Forest Street to a point of intersection with an extension of the westerly property of 71 the lands now or formerly of the Salvation Army, and then northerly and easterly along the western 72 and north property line of the Salvation Army property to the point of intersection with lands now or 73 of late Conrail Railroad, then northerly along the westerly property line of Conrail Railroad and 74 extending to a point of intersection with the centerline of West Division Street, and then easterly 75 along the centerline of East Division Street to the intersection of the easterly right-of-way line of 76 Conrail Railroad, and then northerly along the easterly right-of-way line of Conrail Railroad to the 77 intersection of the right-of-way of Conrail Railroad and the northerly property line of lands now or

Proposed Ordinance #2015-04 - Appendix C - Downtown Redevelopment Page 3 78 of late of Southern States Cooperative, Inc., then proceeding in an easterly direction a distance of 79 52.76 feet to the northeasterly corner of the lands now or of late of Southern States Cooperative, 80 Inc., then proceeding in a southerly direction along the easterly property line of lands now or of late 81 of Southern States Cooperative, Inc., to the point of intersection of said property and the centerline 82 of Cecil Mary Street, then proceeding in an easterly direction along the centerline of Cecil 83 Mary Street to the point of beginning, being the point of intersection of the centerline of Cecil 84 Mary Street and North State Streets Governors Avenue, south along the centerline of North 85 Governors Avenue to the intersection of North Governors Avenue and Cecil Street, and west 86 along the center line of Cecil Street through the Wesley College Campus to the point of 87 intersection of Cecil Street and North State Street. 88 High Priority Target Area shall mean that part of the city more particularly described as bounded 89 by the street center lines as follows: 90 From the intersection of the centerlines of North Governors Avenue and Mary Street south go 91 the intersection of the centerlines of North Governors Avenue and Fulton Street, east to the 92 intersections of the center lines of Fulton Street and North State Street, south to the northern 93 intersection of the center lines of South State Street and The Green, and along the centerline of 94 The Green east of South State Street to the south intersection of the center lines of South State 95 Street and The Green, south to the intersection of the center lines of South State Street and 96 West Water Street and west to the intersection of the center lines of West Water Street and 97 South Queen Street, south along the center line of South Queen Street 541.11 feet and then west 98 to the center line of South West Street, and north to the intersection of the center lines of West 99 North Street and South West Street, and west to the intersection of the center lines of West 100 North Street and Clarence Street and north to the intersection of the center lines of Clarence 101 Street and Slaughter Street, and west along the center line of Slaughter Street to Cherry Street 102 and north along the center line of Cherry Street to the intersection with the center line of 103 Lincoln Street, and east along the center line of Lincoln Street to the intersection of the center 104 lines of Forest Street and South West Street, and north along the center line of South West 105 Street to the intersection of the center lines of West Street and West Division Street, and west to 106 the east property line of the Norfolk Southern railroad track, and north along this property line 107 to the intersection with the center line of Mary Street, and west to the intersection of the center 108 lines of Mary Street and North Governors Avenue. 109 ARTICLE III. - ELIGIBILITY 110 Section 1. - Development incentive eligibility. 111 In order to be eligible for development incentives, the owner of an eligible project must agree 112 to contribute ten percent of the total value of the incentives received to the Downtown Dover 113 Partnership for reinvestment in downtown Dover. 114 Section 2. - Development incentive ineligibility. 115 An otherwise eligible project shall be ineligible for development incentives if: 116 (a) An application for a building permit for the project was filed prior to the effective date of this 117 ordinance; or 118 (b) Construction or renovation commenced prior to the effective date of this ordinance; or

Proposed Ordinance #2015-04 - Appendix C - Downtown Redevelopment Page 4 119 (c) Issuance of the certificate of occupancy and/or the completion and finalization of the building 120 permit occurs before the application for development incentives is received; or 121 (d) The subject property is exempt from City of Dover real estate taxes; or 122 (e) The beneficiary of the incentives is delinquent on any of the obligations listed in section 1- 123 13(b). 124 Section 3. - Revocation of eligibility. 125 The beneficiary of the incentives provided by this Appendix must remain current on all obligations 126 due the city. If, at any time after the incentives have been granted, the beneficiary of the incentives 127 becomes delinquent on any of the obligations listed in section 1-13(b), the city manager shall revoke the 128 eligibility for any portion of the incentives not yet received by the beneficiary. Notice shall be given to 129 such beneficiary in writing. 130 ARTICLE IV. - DEVELOPMENT INCENTIVES 131 Eligible projects within the Target Area shall be eligible for the following development incentives: 132 Section 1. - [Waiver of permit fees.] 133 Fees for building, plumbing, mechanical, and fire protection permits shall be waived for eligible 134 projects. 135 Section 2. - [Waiver of impact fee.] 136 Eligible projects that have received conditional approval from the planning commission after 137 January 31, 2008, that involve multiple story new construction or renovation of an existing 138 building, and have a combination of residential, office, retail, or commercial service uses so that at 139 least two of these uses are established shall qualify for city impact fee waiver of the cost of such fees. 140 Eligible projects that have received conditional approval from the planning commission on or 141 before January 31, 2008, and that are multiple-story new construction on one lot, and have a 142 combination of residential, office, retail, or commercial service uses so that at least two of these 143 uses are established shall qualify for city impact fee waiver of one half the cost of such fees. 144 Section 3. - [Period of tax waiver.] Abatement of property taxes on the value of improvement. 145 Eligible projects shall receive property tax waivers for a period not to exceed ten years so that 146 improvements to the properties made in accordance with the intent of this ordinance will not be taxed for 147 a period of time not to exceed ten years from the date of the making of the improvements. The said ten- 148 year period will commence with the date of issuance of a building permit. 149 Eligible projects within the High Priority Target Area shall also be eligible for the following 150 incentives: 151 · For properties which have transferred on or after March 1, 2015, the property owner shall 152 be eligible for a rebate of the buyer’s portion of the real estate transfer tax upon issuance of

Proposed Ordinance #2015-04 - Appendix C - Downtown Redevelopment Page 5 153 a certificate of occupancy, provided that a certificate of occupancy is issued for 154 improvements to the property within five years of the payment of the real estate transfer 155 tax. 156 · Businesses that open within or relocate to the high priority target area on or after 157 March 1, 2015, shall be eligible for a waiver of all city business license fees associated with 158 the business for a period of three years. Eligible businesses are still required to obtain the 159 required city business licenses. 160 ARTICLE V. - ADMINISTRATION 161 The city manager and his staff shall develop the administrative procedures necessary to implement 162 this ordinance. The city manager and his staff shall promulgate reasonable standards to be used in 163 determining whether an eligible project shall receive development incentives and, if so, which incentives 164 shall be granted. Administrative staff shall review applications for development incentives and grant 165 incentives to eligible projects. Applicants shall be notified of the action taken on their applications by 166 mail. 167 ARTICLE VI. - APPEALS 168 Applicants denied development incentives shall have the right to appeal the decision to the city 169 council within 30 days from the date of mailing of the formal notification. Such appeal shall be in 170 writing, signed by the owner of the property in question, and filed with the city clerk. 171 ARTICLE VII. - SEVERABILITY AND EFFECTIVE DATE 172 Section 1. - [Severability.] 173 Should any section or provision of this ordinance be declared to be unconstitutional or otherwise 174 invalid, such decision shall not affect the validity of the ordinance as a whole or any part thereof other 175 than the parts so declared to be unconstitutional or invalid. 176 Section 2. - [Effective date.] 177 This ordinance shall be effective as of January 1, 1991. 178 ADOPTED: * 179 S:\ORDINANCES\2015\DRAFT\Ordinance #2015-04 Appendix C - Downtown Redevelopment 02-09-15 - First Reading.wpd 180 SYNOPSIS 181 The proposed ordinance modifies the boundary of the Downtown Redevelopment Target Area to ensure 182 that the Downtown Development District falls within the larger target area, and it creates a High Priority 183 Target Area that comprises the Downtown Development District boundary. It removes the 10% donation of 184 the value of redevelopment incentives to the Downtown Dover Partnership, expands the impact fee waiver 185 to remove the applicability to only multi-story mixed use buildings, and it adds two new incentives for the 186 High Priority Target Area: rebate of the buyer's portion of transfer taxes when a Certificate of Occupancy is 187 granted for property improvements, and waiver of City business license fees for new businesses in the area 188 for a period of three years. The proposed ordinance implements the incentives agreed to in the City's 189 Downtown Development District application. 190 (SPONSORS: ANDERSON, BONAR, SLAVIN, AND TOWNSHEND) 191 Actions History 192 02/09/2015 - Scheduled for Introduction at Legislative, Finance, and Administration Committee and First Reading at 193 City Council 194 01/26/2015 - Scheduled for Introduction at Legislative, Finance, and Administration Committee - Meeting Cancelled 195 Due to Inclement Weather

ACTION FORM PROCEEDING: Legislative, Finance & Administration Committee DEPARTMENT OF ORIGIN: Finance DATE SUBMITTED: 01/30/2015 PREPARED BY: Donna Mitchell, Controller/Treasurer SUBJECT: Proposed Budget Amendment for Fiscal Year 2015 APPROVALS: City Council EXHIBITS: N/A EXPENDITURE REQUIRED: Total: AMOUNT BUDGETED: N/A FUNDING SOURCE: TIMETABLE: RECOMMENDED ACTION: Staff recommends approval of the proposed Budget Amendment for Fiscal Year 2015 and consideration of the recommendation to replenish the Contingency Reserve $300,000 and transfer $85,000 to the Capital Asset Reserve. The proposed budget amendment includes the adjustments to the Beginning Budget Balances for all funds now that the City’s audit has been completed. It also includes any adjustments related to Council Actions to date on changes in project budgets or operating items that were not included in the original budget. Council’s policy on transferring savings from prior year personnel expenses to the Pension or OPEB Trust Funds has also been included. The General Fund includes a transfer to the Police Pension Fund of $100,000 and a transfer to the Civilian Pension Fund of $543,000, for a total of $643,000. The Water/Sewer and Electric Fund both did not have any personnel savings due to the change in pension accounting. Additional adjustments are as follows:  Increases to Division budgets for vacation sell-back, retirement payout, and education assistance with a corresponding decrease to Other Employment Expenses across all applicable funds.  Transfer In from the Contingency Reserve for the final payment of the police grievances with a corresponding adjustment to the Police budget.  Increases in the following revenue items based on greater than planned receipts Kent County Reciprocal Borrowing and Municipal Street Aid.  A transfer of $80,000 in capital project funds to the Parks and Recreation Reserve to set aside the budgeted funds for the White Oak Park improvements while we are waiting on the final needs assessment. After the above adjustments the General Fund Budget Balance will be $385,000 over the budgeted amount. It is staff’s recommendation that we replenish the Contingency Reserve for the $300,000 used to settle the police grievances; and to transfer the $85,000 to the Capital Asset Reserve in light of potential funding needs of the President’s Counsel on Public/Private Partnerships and the future of City Hall, Weyandt Hall, and the former Dover Library. These two items have not been incorporated into the Budget Ordinance to allow for discussion.

FIRST READING CITY OF DOVER ORDINANCE # 2015-05 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT 1 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 2 The amount hereinafter named aggregating Forty Three Million Three Hundred Ninety Nine Thousand dollars 3 ($43,399,000) or so much thereof as may be necessary are hereby appropriated from current revenues 4 and other funds for the use by several departments of the Municipal Government for the fiscal year 5 beginning July 1, 2014 and ending June 30, 2015: 6 GENERAL FUND 7 REVENUES AND BUDGET FOR 2014-2015 8 2014/15 2014/15 9 BUDGET REVISED 10 BEGINNING BALANCE $ 3,393,000 $ 4,361,500 11 REVENUES 12 FINES AND POLICE REVENUE 629,300 629,300 13 INVESTMENT INCOME 40,000 40,000 14 LIBRARY REVENUES 71,600 71,600 15 KENT COUNTY BOOK REIMBURSEMENT 450,000 490,000 16 BUSINESS LICENSES 1,460,000 1,460,000 17 PERMITS AND OTHER LICENSES 1,354,200 1,354,200 18 MISCELLANEOUS CHARGES 53,900 53,900 19 POLICE EXTRA DUTY 659,500 659,500 20 PROPERTY TAXES 11,049,200 11,049,200 21 BID REVENUE 50,000 50,000 22 RECREATION REVENUE 148,800 148,800 23 FRANCHISE FEE 636,000 636,000 24 SANITATION FEES 2,595,600 2,595,600 25 RENT REVENUE - GARRISON FARM 101,400 101,400 26 COURT OF CHANCERY FEES 1,023,000 1,023,000 27 REVENUES SUBTOTAL 20,322,500 20,362,500 28 INTERFUND SERVICE RECEIPTS 29 INTRAFUND SERVICE RECEIPTS WATER/WASTEWATER 1,354,900 1,371,100 30 INTRAFUND SERVICE RECEIPTS ELECTRIC 3,508,100 3,588,200 31 INTERFUND SERVICE RECEIPTS SUBTOTAL 4,863,000 4,959,300 32 GRANTS 33 POLICE RELATED 124,000 124,000 34 POLICE PENSION GRANT 500,000 500,000 35 GREEN ENERGY GRANT 98,500 98,500 36 MISCELLANEOUS GRANTS 25,000 25,000 37 GRANTS SUBTOTAL 747,500 747,500 38 TRANSFERS FROM 39 TRANSFER TAX 1,250,000 1,250,000 40 MUNICIPAL STREET AID 663,900 664,200 41 CIVIL TRAFFIC PENALTIES 500,000 500,000 42 WATER/WASTEWATER 500,000 500,000 43 ELECTRIC 10,000,000 10,000,000 44 OTHER RESERVES INCLUDING CONTINGENCY 4,000 54,000 45 TRANSFERS FROM SUBTOTAL 12,917,900 12,968,200 46 TOTAL REVENUES 38,850,900 39,037,500 47 TOTALS $ 42,243,900 $ 43,399,000 1

FIRST READING 48 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 49 GENERAL FUND - EXPENDITURES AND BUDGET BALANCE 50 2014/15 2014/15 51 DEPARTMENT EXPENSES BUDGET REVISED 52 CITY CLERK $ 383,200 $ 386,700 53 COUNCIL 106,600 106,600 54 TAX ASSESSOR 309,500 319,100 55 FIRE 716,100 716,100 56 GROUNDS MAINTENANCE 1,123,800 1,130,100 57 LIBRARY 1,393,100 1,422,000 58 RECREATION 706,400 710,800 59 LIFE SAFETY 504,800 535,700 60 CODE INFORCEMENT 418,400 419,400 61 PLANNING 444,100 449,400 62 INSPECTIONS 602,100 614,400 63 ECONOMIC DEVELOPMENT 223,000 223,000 64 POLICE 13,986,100 14,332,500 65 POLICE EXTRA DUTY 712,500 712,500 66 STREETS 665,100 676,200 67 SANITATION 2,248,000 2,225,200 68 CITY MANAGER 592,500 595,900 69 INFORMATION TECHNOLOGY 728,700 733,800 70 FINANCE 947,100 966,800 71 PUBLIC SERVICES - ADMINISTRATION 514,800 517,700 72 FACILITIES MANAGEMENT 677,800 690,400 73 PUBLIC WORKS - ENGINEERING 192,600 193,700 74 PROCUREMENT & INVENTORY 535,600 538,700 75 FLEET MAINTENANCE 776,700 791,300 76 CUSTOMER SERVICES 1,040,300 1,044,600 77 HUMAN RESOURCES 379,700 384,300 78 MAYOR 74,900 74,900 79 DEPARTMENT SUBTOTALS 31,003,500 31,511,800 80 OTHER EXPENSES 81 DEBT SERVICE 708,600 708,600 82 CONTRIBUTION TO DDP 70,000 70,000 83 MISCELLANEOUS GRANT RELATED EXPENSES 25,000 25,000 84 INSURANCE 724,800 724,800 85 RETIREES HEALTH CARE 1,636,500 1,636,500 86 OTHER EMPLOYMENT EXPENSES 500,000 118,200 87 POLICE PENSION FUND - STATE GRANT 500,000 500,000 88 POLICE PENSION FUND - UNFUNDED LIABILITY 655,000 655,000 89 UNCOLLECTIBLES - TRASH AND OTHER 50,000 50,000 90 STREET LIGHTS 774,500 774,500 91 OTHER EXPENSE SUBTOTAL 5,644,400 5,262,600 92 TRANSFERS 93 TRANSFER TO CAPITAL FUND - PROJECTS 2,196,000 2,196,000 94 APPROPRIATION TO THE POLICE PENSION FUND - 100,000 95 APPROPRIATION TO THE GENERAL PENSION FUND - 543,000 96 TRANSFERS SUBTOTAL 2,196,000 2,839,000 97 TOTAL EXPENDITURES 38,843,900 39,613,400 98 CURRENT YEAR BALANCE 3,400,000 3,785,600 99 TOTALS $ 42,243,900 $ 43,399,000 100 The City Manager is hereby authorized, without further approval of the City Council, to make 101 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 102 department with the exception of any transfers prohibited by City Procedure #F306. 103 ADOPTED: * 2

FIRST READING 104 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 105 GOVERNMENTAL CAPITAL PROJECTS FUND 106 REVENUES AND BUDGET FOR 2014-2015 107 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 108 The amount hereinafter named aggregating Eight Million, Seven Hundred Fifty Five Thousand, Nine Hundred 109 Dollars ($8,755,900) or so much thereof as may be necessary are hereby appropriated from current revenues 110 and other funds for the use by several departments of the Municipal Government for the fiscal year beginning 111 July 1,2014 and ending June 30, 2015: 112 REVENUES 113 2014/15 2014/15 114 BUDGET REVISED 115 BEGINNING BALANCE $ 117,100 $ 2,324,100 116 BEGINNING BALANCE - LIBRARY PROJECT - 330,500 117 REVENUES 118 STATE GRANTS - OTHER 153,000 208,000 119 PROPOSED BOND/BANK PROCEEDS - Street 2,661,100 2,675,000 120 LEASE PURCHASE OF FIRE AND POLICE EQUIPMENT 918,300 918,300 121 TRANSFER FROM GENERAL FUND FOR PROJECTS 2,196,000 2,196,000 122 TRANSFER FROM PARKLAND RESERVE - 104,000 123 TOTAL REVENUES 5,928,400 6,101,300 124 TOTAL BEGINNING BALANCE AND REVENUES $ 6,045,500 $ 8,755,900 125 EXPENSE SUMMARY 126 2014/15 2014/15 127 DEPARTMENT EXPENSES BUDGET REVISED 128 FIRE $ 827,300 $ 827,300 129 GROUNDS MAINTENANCE 68,100 86,700 130 RECREATION 146,000 284,400 131 POLICE 499,100 601,700 132 STREETS 1,370,300 470,300 133 STREETS - GARRISON FARM INFRASTRUCTURE 2,586,100 5,447,600 134 SANITATION 256,500 256,500 135 CENTRAL SERVICES - 55,000 136 BOND/LOAN ISSUANCE COST 75,000 61,100 137 DEPARTMENT SUBTOTAL 5,828,400 8,090,600 138 TRANSFERS & MISCELLANEOUS EXPENSES 139 TRANSFER TO PARKLAND RESERVE 100,000 180,000 140 TRANSFER TO CAPITAL PROJECT RESERVE - 330,500 141 TRANSFERS & MISCELLANEOUS SUBTOTAL 100,000 510,500 142 TOTAL EXPENSES AND TRANSFERS 5,928,400 8,601,100 143 CURRENT YEAR BALANCE 117,100 154,800 144 TOTALS $ 6,045,500 $ 8,755,900 145 The City Manager is hereby authorized, without further approval of the City Council, to make 146 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 147 department with the exception of any transfers prohibited by City Procedure #F306. 148 ADOPTED: 3

FIRST READING 149 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 150 GENERAL FUND CONTINGENCY 151 CASH RECEIPTS/REVENUES AND BUDGET FOR 2014-2015 152 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 153 The amount hereinafter named aggregating Four Hundred Sixty Nine Thousand Two Hundred 154 dollars ($469,200) or so much thereof as may be necessary are hereby appropriated from current 155 revenues and other funds for the use by several departments of the Municipal Government for the 156 fiscal year beginning July 1, 2014 and ending June 30, 2015: 157 CASH RECEIPTS 158 2014/15 2014/15 159 BUDGET REVISED 160 BEGINNING BALANCE $ 466,000 $ 467,300 161 INTEREST EARNED 1,900 1,900 162 TOTALS $ 467,900 $ 469,200 163 EXPENSE SUMMARY 164 2014/15 2014/15 165 BUDGET REVISED 166 TRANSFER TO OPERATING ACCOUNT $ - $ 50,000 167 CARRY FORWARD TO NEXT YEAR 467,900 419,200 168 TOTALS $ 467,900 $ 469,200 169 The City Manager is hereby authorized, without further approval of the City Council, to make 170 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 171 department with the exception of any transfers prohibited by City Procedure #F306. 172 ADOPTED: * 4

FIRST READING 173 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 174 GENERAL CAPITAL ASSET RESERVE 175 CASH RECEIPTS/REVENUES AND BUDGET FOR 2014-2015 176 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 177 The amount hereinafter named aggregating Eight Hundred Fifty Four Thousand dollars ($854,000) 178 or so much thereof as may be necessary are hereby appropriated from current revenues and 179 other funds for the use by several departments of the Municipal Government for the fiscal year 180 beginning July 1, 2014 and ending June 30, 2015: 181 CASH RECEIPTS 182 2014/15 2014/15 183 BUDGET REVISED 184 BEGINNING BALANCE $ 509,800 $ 521,000 185 RECEIPTS 186 INTEREST EARNINGS 2,500 2,500 187 TRANSFER FROM GENERAL FUND CAPITAL PROJECT FUND - 330,500 188 TOTAL RECEIPTS 2,500 333,000 189 TOTALS $ 512,300 $ 854,000 190 EXPENSE SUMMARY 191 2014/15 2014/15 192 BUDGET REVISED 193 CARRY FORWARD TO NEXT YEAR $ 512,300 $ 854,000 194 TOTALS $ 512,300 $ 854,000 195 The City Manager is hereby authorized, without further approval of the City Council, to make 196 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 197 department with the exception of any transfers prohibited by City Procedure #F306. 198 ADOPTED: * 5

FIRST READING 199 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 200 PARKLAND/RECREATION RESERVE 201 CASH RECEIPTS/REVENUES AND BUDGET FOR 2014-2015 202 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 203 The amount hereinafter named aggregating Three Hundred Ninety Nine Thousand Seven Hundred Dollars 204 ($399,700) or so much thereof as may be necessary are hereby appropriated from current revenues 205 and other funds for the use by several departments of the Municipal Government for the fiscal 206 year beginning July 1, 2014 and ending June 30, 2015: 207 OPERATING REVENUES 208 2014/15 2014/15 209 BUDGET REVISED 210 PRIOR YEAR BALANCE $ 203,800 $ 218,700 211 GENERAL FUND APPROPRIATION 100,000 180,000 212 INTEREST INCOME 1,000 1,000 213 TOTALS $ 304,800 $ 399,700 214 OPERATING EXPENSES 215 2014/15 2014/15 216 BUDGET REVISED 217 CURRENT YEAR BALANCE 304,800 399,700 218 TOTALS $ 304,800 $ 399,700 219 The City Manager is hereby authorized, without further approval of the City Council, to make 220 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 221 department with the exception of any transfers prohibited by City Procedure #F306. 222 ADOPTED: * 6

FIRST READING 223 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 224 MUNICIPAL STREET AID FUND 225 CASH RECEIPTS/REVENUES AND BUDGET FOR 2014-2015 226 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 227 The amount hereinafter named aggregating Six Hundred Sixty Four Thousand Three Hundred 228 dollars ($664,300) or so much thereof as may be necessary are hereby appropriated from current 229 revenues and other funds for the use by several departments of the Municipal Government for the 230 fiscal year beginning July 1, 2014 and ending June 30, 2015: 231 CASH RECEIPTS 232 2014/15 2014/15 233 BUDGET REVISED 234 BEGINNING BALANCE $ 100 $ 100 235 STATE GRANT - OPERATIONS 663,900 664,200 236 TOTALS $ 664,000 $ 664,300 237 BUDGET SUMMARY 238 2014/15 2014/15 239 BUDGET REVISED 240 TRANSFER TO GENERAL FUND - OPERATIONS $ 663,900 $ 664,200 242 CURRENT YEAR BALANCE 100 100 243 TOTALS $ 664,000 $ 664,300 244 The City Manager is hereby authorized, without further approval of the City Council, to make 245 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 246 department with the exception of any transfers prohibited by City Procedure #F306. 247 ADOPTED: * 7

FIRST READING 248 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 249 WATER/WASTEWATER FUND 250 REVENUES AND BUDGET FOR 2014-2015 251 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 252 The amount hereinafter named aggregating Fifteen Million Eight Hundred Four Thousand Nine Hundred 253 dollars ($15,804,900) or so much thereof as may be necessary are hereby appropriated from current 254 revenues and other funds for the use by several departments of the Municipal Government for the 255 fiscal year beginning July 1, 2014 and ending June 30, 2015: 256 2014/15 2014/15 257 BUDGET REVISED 258 BEGINNING BALANCE - WATER $ 658,400 $ 763,600 259 BEGINNING BALANCE - WASTEWATER (98,500) 87,500 260 BEGINNING BALANCE - KCSA 155,000 453,400 261 TOTAL BEGINNING BALANCES 714,900 1,304,500 262 BASE REVENUE 263 WATER FEES 4,616,400 4,616,400 264 WASTEWATER FEES 3,706,800 3,706,800 265 WASTEWATER ADJUSTMENT FEES 2,902,600 2,902,600 266 GROUNDWATER INFLOW ADJUSTMENT 1,862,500 1,862,500 267 WATER TANK SPACE LEASING 331,900 331,900 268 SEWER IMPACT FEES 427,900 427,900 269 WATER IMPACT FEES 472,700 472,700 270 INTEREST - WATER 9,000 9,000 271 INTEREST - WASTEWATER 14,000 14,000 272 MISCELLANEOUS SERVICE FEE 156,600 156,600 273 TOTAL REVENUES 14,500,400 14,500,400 274 TOTAL BEGINNING BALANCES AND REVENUES $ 15,215,300 $ 15,804,900 8

FIRST READING 275 2014-2015 BUDGET ORDINANCES - CONTINUED 276 WATER/WASTEWATER FUND EXPENSES AND BUDGET BALANCES 2014/15 2014/15 277 DIRECT EXPENSES BUDGET REVISED 278 ENGINEERING & INSPECTION $ 500,900 $ 502,400 279 WATER CONSTRUCTION 252,500 253,300 280 WATER DEPARTMENT 485,300 488,600 281 WATER TREATMENT PLANT 1,576,900 1,582,200 282 WASTEWATER DEPARTMENT 974,100 974,700 283 DIRECT EXPENDITURE SUBTOTAL 3,789,700 3,801,200 284 OTHER EXPENSES 285 DEBT SERVICE - WATER 534,100 534,100 286 DEBT SERVICE - WASTEWATER 617,900 617,900 287 RETIREES HEALTH CARE 200,000 200,000 288 OTHER EMPLOYMENT EXPENSES 17,700 6,200 289 KENT COUNTY TREATMENT CHARGE 3,655,000 3,655,000 290 INTRAFUND SERVICE FEES 1,354,900 1,371,100 291 OTHER EXPENSES SUBTOTAL 6,379,600 6,384,300 292 TRANSFER TO 293 GENERAL FUND FROM WATER 250,000 250,000 294 GENERAL FUND FROM WASTEWATER 250,000 250,000 295 WATER IMP AND EXT 1,200,000 1,200,000 296 WASTEWATER IMP AND EXT 1,800,000 1,800,000 297 TRANSFER TO SUBTOTAL 3,500,000 3,500,000 298 TOTAL EXPENSES 13,669,300 13,685,500 299 CURRENT YEAR BALANCES 300 CURRENT YEAR BALANCE WATER 1,020,100 1,113,300 301 CURRENT YEAR BALANCE WASTEWATER (739,200) (557,400) 302 CURRENT YEAR BALANCE KCSA 1,265,100 1,563,500 303 CURRENT YEAR BALANCE SUBTOTALS 1,546,000 2,119,400 304 TOTAL CURRENT YEAR BALANCES AND EXPENSES $ 15,215,300 $ 15,804,900 305 The City Manager is hereby authorized, without further approval of the City Council, to make 306 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 307 department with the exception of any transfers prohibited by City Procedure #F306. 308 ADOPTED: * 9

FIRST READING 309 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 310 WATER/WASTEWATER IMPROVEMENT & EXTENSION FUND 311 CASH RECEIPTS/REVENUES AND BUDGET FOR 2014-2015 312 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 313 The amount hereinafter named aggregating Seventeen Million, Four Hundred Forty Four Thousand, Eight 314 Hundred dollars ($17,444,800) or so much thereof as may be necessary are hereby appropriated from current 315 revenues and other funds for the use by several departments of the Municipal Government for the fiscal year 316 beginning July 1, 2014 and ending June 30, 2015: 317 CASH RECEIPTS 318 2014/15 2014/15 319 BUDGET REVISED 320 PRIOR YEAR BALANCE - WATER $ 1,021,200 $ 7,588,800 321 PRIOR YEAR BALANCE - WASTEWATER 1,060,000 5,500,400 322 TOTAL BEGINNING BALANCES 2,081,200 13,089,200 323 RECEIPTS 324 TRANS FROM OPERATING FUND FOR WATER 1,200,000 1,200,000 325 TRANS FROM OPERATING FUND FOR WASTEWATER 1,800,000 1,800,000 326 TRANSFER FROM WASTEWATER IMPACT FEE RESERVE 1,315,600 1,315,600 327 INTEREST INCOME 25,000 40,000 328 TOTAL RECEIPTS 4,340,600 4,355,600 329 TOTALS $ 6,421,800 $ 17,444,800 330 EXPENSE SUMMARY 331 2014/15 2014/15 332 EXPENSES BUDGET REVISED 333 WATER $ 1,336,900 $ 7,526,500 334 WASTEWATER 3,277,200 7,757,300 335 WATER TREATMENT PLANT 38,100 38,100 336 TOTAL EXPENSES 4,652,200 15,321,900 337 CURRENT YEAR BALANCE - WATER 858,700 1,244,200 338 CURRENT YEAR BALANCE - WASTEWATER 910,900 878,700 339 CURRENT YEAR BALANCE SUBTOTALS 1,769,600 2,122,900 340 TOTALS $ 6,421,800 $ 17,444,800 341 The City Manager is hereby authorized, without further approval of the City Council, to make 342 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 343 department with the exception of any transfers prohibited by City Procedure #F306. 344 ADOPTED: * 10

FIRST READING 345 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 346 WATER/WASTEWATER CAPITAL ASSET RESERVE 347 CASH RECEIPTS/REVENUES AND BUDGET FOR 2014-2015 348 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 349 The amount hereinafter named aggregating One Million Forty One Thousand Six Hundred Dollars 350 ($1,041,600) or so much thereof as may be necessary are hereby appropriated from current 351 revenues and other funds for the use by several departments of the Municipal Government for 352 the fiscal year beginning July 1, 2014 and ending June 30, 2015: 353 CASH RECEIPTS 354 2014/15 2014/15 355 BUDGET REVISED 356 BEGINNING BALANCE - WATER $ 514,000 $ 508,500 357 BEGINNING BALANCE - WASTEWATER 512,900 507,300 358 TOTAL BEGINNING BALANCES 1,026,900 1,015,800 359 RECEIPTS 360 INTEREST EARNINGS - WATER 8,700 8,700 361 INTEREST EARNINGS - WASTEWATER 8,700 8,700 362 2013 BONDS UNUSED COST OF ISSUANCE FUNDS WATER - 5,300 363 2013 BONDS UNUSED COST OF ISSUANCE FUNDS WASTEWATER - 3,100 364 TOTAL RECEIPTS 17,400 25,800 365 TOTALS $ 1,044,300 $ 1,041,600 366 EXPENSE SUMMARY 367 2014/15 2014/15 368 BUDGET REVISED 369 CURRENT YEAR BALANCE - WATER $ 522,700 $ 522,500 370 CURRENT YEAR BALANCE - WASTEWATER 521,600 519,100 371 CURRENT YEAR BALANCE SUBTOTALS 1,044,300 1,041,600 372 TOTALS $ 1,044,300 $ 1,041,600 373 The City Manager is hereby authorized, without further approval of the City Council, to make 374 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 375 department with the exception of any transfers prohibited by City Procedure #F306. 376 ADOPTED: * 11

FIRST READING 377 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 378 WATER/WASTEWATER IMPACT FEE RESERVE 379 CASH RECEIPTS/REVENUES AND BUDGET FOR 2014-2015 380 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 381 The amount hereinafter named aggregating Three Million Twenty Seven Thousand Nine Hundred Dollars 382 ($3,027,900) or so much thereof as may be necessary are hereby appropriated from current 383 revenues and other funds for the use by several departments of the Municipal Government for 384 the fiscal year beginning July 1, 2014 and ending June 30, 2015: 385 CASH RECEIPTS 386 2014/15 2014/15 387 BUDGET REVISED 388 BEGINNING BALANCE - WATER $ 200,500 $ 200,200 389 BEGINNING BALANCE - WASTEWATER 2,820,000 2,776,400 390 TOTAL BEGINNING BALANCES 3,020,500 2,976,600 391 RECEIPTS 392 INTEREST EARNINGS - WATER 3,400 3,400 393 INTEREST EARNINGS - WASTEWATER 47,900 47,900 394 TOTAL RECEIPTS 51,300 51,300 395 TOTALS $ 3,071,800 $ 3,027,900 396 EXPENSE SUMMARY 397 2014/15 2014/15 398 BUDGET REVISED 399 TRANSFER TO I & E FUND FROM WASTEWATER IMPACT FEES $ 1,315,600 $ 1,315,600 399 CURRENT YEAR BALANCE - WATER 203,900 203,600 400 CURRENT YEAR BALANCE - WASTEWATER 1,552,300 1,508,700 401 CURRENT YEAR BALANCE SUBTOTALS 1,756,200 1,712,300 402 TOTALS $ 3,071,800 $ 3,027,900 403 The City Manager is hereby authorized, without further approval of the City Council, to make 404 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 405 department with the exception of any transfers prohibited by City Procedure #F306. 406 ADOPTED: * 12

FIRST READING 407 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 408 WATER/WASTEWATER CONTINGENCY RESERVE 409 CASH RECEIPTS/REVENUES AND BUDGET FOR 2014-2015 410 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 411 The amount hereinafter named aggregating Two Hundred Ninety Nine Thousand two Hundred dollars 412 ($299,200) or so much thereof as may be necessary are hereby appropriated from current revenues 413 and other funds for the use by several departments of the Municipal Government for the fiscal year 414 beginning July 1, 2014 and ending June 30, 2015: 415 CASH RECEIPTS 416 2014/15 2014/15 417 BUDGET REVISED 418 BEGINNING BALANCE - WATER $ 105,900 $ 104,700 419 BEGINNING BALANCE - WASTEWATER 191,500 189,400 420 TOTAL BEGINNING BALANCES 297,400 294,100 421 RECEIPTS 422 INTEREST EARNINGS 5,100 5,100 423 TOTAL RECEIPTS 5,100 5,100 424 TOTALS $ 302,500 $ 299,200 425 BUDGET SUMMARY 426 2014/15 2014/15 427 BUDGET REVISED 428 CURRENT YEAR BALANCE - WATER 107,700 106,500 429 CURRENT YEAR BALANCE - WASTEWATER 194,800 192,700 430 CURRENT YEAR BALANCE SUBTOTALS 302,500 299,200 431 TOTAL EXPENSES AND CURRENT YEAR BALANCES $ 302,500 $ 299,200 432 The City Manager is hereby authorized, without further approval of the City Council, to make 433 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 434 department with the exception of any transfers prohibited by City Procedure #F306. 435 ADOPTED: * 13

FIRST READING 436 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 437 ELECTRIC REVENUE FUND 438 REVENUES AND BUDGET FOR 2014-2015 439 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 440 The amount hereinafter named aggregating Eighty Eight Million Nine Hundred Ten Thousand 441 Three Hundred dollars ($88,910,300) or so much thereof as may be necessary are hereby 442 appropriated from current revenues and other funds for the use by several departments of the 443 Municipal Government for the fiscal year beginning July 1, 2014 and ending June 30, 2015: 444 2014/15 2014/15 445 BUDGET REVISED 446 BEGINNING BALANCE $ 9,253,600 $ 6,603,800 447 BASE REVENUE 448 DIRECT SALES TO CUSTOMER 78,043,000 78,043,000 449 UTILITY TAX 1,296,900 1,296,900 450 MISCELLANEOUS REVENUE 624,600 624,600 451 RENT REVENUE 200,000 200,000 452 GREEN ENERGY 130,000 130,000 453 INTEREST EARNINGS 12,000 12,000 454 TRANSFER FROM RATE STABILIZATION 2,000,000 2,000,000 455 TOTAL REVENUES 82,306,500 82,306,500 456 TOTALS $ 91,560,100 $ 88,910,300 14

FIRST READING 457 2014-2015 BUDGET ORDINANCES - CONTINUED 458 ELECTRIC FUND EXPENSES AND BUDGET BALANCE 459 2014/15 2014/15 460 EXPENSES BUDGET REVISED 461 POWER SUPPLY $ 21,823,000 $ 21,823,000 462 SOLAR ENERGY 2,067,600 2,067,600 463 SOLAR RENEWAL ENERGY CREDITS 378,600 378,600 464 POWER SUPPLY MANAGEMENT 996,000 996,000 465 PJM CHARGES - ENERGY 11,499,800 11,499,800 466 PJM CHARGES - TRANSMISSION & FEES 7,234,100 7,234,100 467 CAPACITY CHARGES 9,958,900 9,958,900 468 SUB-TOTAL POWER SUPPLY 53,958,000 53,958,000 469 PLANT OPERATIONS 6,141,000 6,141,100 470 GENERATIONS FUELS 1,611,100 1,611,100 471 PJM SPOT MARKET ENERGY (2,232,800) (2,232,800) 472 PJM CREDITS (486,700) (486,700) 473 CAPACITY CREDITS (8,881,500) (8,881,500) 474 GENERATION SUBTOTAL (3,848,800) (3,848,800) 475 POWER SUPPLY & GENERATION SUBTOTAL 50,109,200 50,109,200 476 DIRECT EXPENDITURES 477 TRANSMISSION/DISTRIBUTION 4,028,700 4,044,500 478 ELECTRICAL ENGINEERING 1,370,900 1,374,300 479 ADMINISTRATION 636,600 637,400 480 METER READING 267,600 267,600 481 SYSTEMS OPERATIONS 686,300 696,500 482 DIRECT EXPENDITURE SUBTOTALS 6,990,100 7,020,300 483 OTHER EXPENSES: 484 UTILITY TAX 1,296,900 1,296,900 485 ALLOW FOR UNCOLLECTIBLES 200,000 200,000 486 CONTRACTUAL SERVICES 246,800 246,800 487 RETIREES HEALTH CARE 513,300 513,300 488 OTHER EMPLOYMENT EXPENSES 54,200 24,000 489 OPEB UNFUNDED LIABILITY 1,009,800 1,009,800 490 GREEN ENERGY PAYMENT TO DEMEC 130,000 130,000 491 INTRAFUND SERVICE FEES 3,508,100 3,588,200 492 INTEREST ON DEPOSITS 20,000 20,000 493 INVENTORY WRITE OFFS 175,000 175,000 494 DEBT SERVICE 3,297,000 3,297,000 495 OTHER EXPENSES SUBTOTAL 10,451,100 10,501,000 496 TRANSFER TO 497 IMPROVEMENT & EXTENSION 4,750,000 4,750,000 498 GENERAL FUND 10,000,000 10,000,000 499 TRANSFER TO SUBTOTAL 14,750,000 14,750,000 500 TOTAL EXPENSES 82,300,400 82,380,500 501 CURRENT YEAR BALANCE 9,259,700 6,529,800 502 TOTALS $ 91,560,100 $ 88,910,300 503 The City Manager is hereby authorized, without further approval of the City Council, to make 504 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 505 department with the exception of any transfers prohibited by City Procedure #F306. 506 ADOPTED: * 15

FIRST READING 507 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 508 ELECTRIC UTILITY IMPROVEMENT AND EXTENSION FUND 509 CASH RECEIPTS/REVENUES AND BUDGET FOR 2014-2015 510 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 511 The amount hereinafter named aggregating Ten Million, Nine Hundred Sixty Seven Thousand Three 512 Hundred Dollars ($10,967,300) or so much thereof as may be necessary are hereby appropriated from 513 current revenues and other funds for the use by several departments of the Municipal Government for 514 the fiscal year beginning July 1, 2014 and ending June 30, 2015: 515 CASH RECEIPTS 516 517 2014/15 2014/15 BUDGET REVISED 518 BEGINNING BALANCE $ 3,362,200 $ 5,942,500 519 RECEIPTS 520 TRANSFER FROM ELECTRIC 4,750,000 4,750,000 521 GENERAL SERVICE BILLING 250,000 250,000 522 INTEREST EARNINGS 24,800 24,800 523 TOTAL RECEIPTS 5,024,800 5,024,800 524 TOTALS $ 8,387,000 $ 10,967,300 525 EXPENSE SUMMARY 526 2014/15 2014/15 527 EXPENSES BUDGET REVISED 528 ELECTRIC GENERATION $ 2,240,000 $ 2,739,300 529 TRANSMISSION AND DISTRIBUTION 1,061,700 1,804,200 530 ELECTRICAL ENGINEERING 1,663,100 2,800,200 531 TOTAL EXPENSES 4,964,800 7,343,700 532 CURRENT YEAR BALANCE 3,422,200 3,623,600 533 TOTALS $ 8,387,000 $ 10,967,300 534 The City Manager is hereby authorized, without further approval of the City Council, to make 535 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 536 department with the exception of any transfers prohibited by City Procedure #F306. 537 ADOPTED: * 16

FIRST READING 538 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 539 ELECTRIC UTILITY CONTINGENCY RESERVE 540 CASH RECEIPTS/REVENUES AND BUDGET FOR 2014-2015 541 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 542 The amount hereinafter named aggregating Eight Hundred Twenty Five Thousand dollars 543 ($825,000) or so much thereof as may be necessary are hereby appropriated from current revenues 544 and other funds for the use by several departments of the Municipal Government for the fiscal year 545 beginning July 1, 2014 and ending June 30, 2015: 546 CASH RECEIPTS 547 2014/15 2014/15 548 BUDGET REVISED 549 BEGINNING BALANCE $ 820,100 $ 819,100 550 RECEIPTS 551 INTEREST EARNINGS 5,900 5,900 552 TOTAL RECEIPTS 5,900 5,900 553 TOTALS $ 826,000 $ 825,000 554 EXPENSE SUMMARY 555 2014/15 2014/15 556 BUDGET REVISED 556 CURRENT YEAR BALANCE 826,000 825,000 557 TOTALS $ 826,000 $ 825,000 558 The City Manager is hereby authorized, without further approval of the City Council, to make 559 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 560 department with the exception of any transfers prohibited by City Procedure #F306. 561 ADOPTED: * 17

FIRST READING 562 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 563 ELECTRIC UTILITY DEPRECIATION RESERVE 564 SOURCES AND USE OF FUNDS FOR 2014-2015 565 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 566 The amount hereinafter named aggregating Ten Million Fifteen Thousand Three Hundred 567 dollars ($10,015,300) or so much thereof as may be necessary are hereby appropriated 568 from current revenues and other funds for the use by several departments of the 569 Municipal Government for the fiscal year beginning July 1, 2014 and ending June 30, 2015: 570 CASH RECEIPTS 571 2014/15 2014/15 572 BUDGET REVISED 573 BEGINNING BALANCE $ 9,898,000 $ 9,915,100 574 INTEREST EARNINGS 100,200 100,200 575 TOTALS $ 9,998,200 $ 10,015,300 576 BUDGET SUMMARY 577 2014/15 2014/15 578 BUDGET REVISED 579 CURRENT YEAR BALANCE 9,998,200 10,015,300 580 TOTALS $ 9,998,200 $ 10,015,300 581 The City Manager is hereby authorized, without further approval of the City Council, to make 582 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 583 department with the exception of any transfers prohibited by City Procedure #F306. 584 ADOPTED: * 18

FIRST READING 585 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 586 ELECTRIC UTILITY FUTURE CAPACITY RESERVE 587 SOURCES AND USE OF FUNDS FOR 2014-2015 588 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 589 The amount hereinafter named aggregating Ten Million One Hundred Thirty Six Thousand Nine Hundred 590 dollars ($10,136,900) or so much thereof as may be necessary are hereby appropriated from current revenues 591 and other funds for the use by several departments of the Municipal Government for the fiscal year 592 beginning July 1, 2014 and ending June 30, 2015: 593 CASH RECEIPTS 594 2014/15 2014/15 595 BUDGET REVISED 596 BEGINNING BALANCE $ 10,076,200 $ 10,064,400 597 INTEREST EARNINGS 72,500 72,500 598 TOTALS $ 10,148,700 $ 10,136,900 599 BUDGET SUMMARY 600 2014/15 2014/15 601 BUDGET REVISED 602 CURRENT YEAR BALANCE 10,148,700 10,136,900 603 TOTALS $ 10,148,700 $ 10,136,900 604 The City Manager is hereby authorized, without further approval of the City Council, to make 605 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 606 department with the exception of any transfers prohibited by City Procedure #F306. 607 ADOPTED: * 19

FIRST READING 608 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 609 ELECTRIC UTILITY INSURANCE STABILIZATION RESERVE 610 SOURCES AND USE OF FUNDS FOR 2014-2015 611 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 612 The amount hereinafter named aggregating Seven Hundred Forty Two Thousand Eight Hundred dollars 613 ($742,800) or so much thereof as may be necessary are hereby appropriated from current revenues 614 and other funds for the use by several departments of the Municipal Government for the fiscal year 615 beginning July 1, 2014 and ending June 30, 2015: 616 CASH RECEIPTS 617 2014/15 2014/15 618 BUDGET REVISED 619 BEGINNING BALANCE $ 738,300 $ 737,500 620 INTEREST EARNINGS 5,300 5,300 621 TOTALS $ 743,600 $ 742,800 622 BUDGET SUMMARY 623 2014/15 2014/15 624 BUDGET REVISED 625 CURRENT YEAR BALANCE 743,600 742,800 626 TOTALS $ 743,600 $ 742,800 627 The City Manager is hereby authorized, without further approval of the City Council, to make 628 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 629 department with the exception of any transfers prohibited by City Procedure #F306. 630 ADOPTED: * 20

FIRST READING 631 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 632 ELECTRIC UTILITY RATE STABILIZATION RESERVE 633 SOURCES AND USE OF FUNDS FOR 2014-2015 634 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 635 The amount hereinafter named aggregating Ten Million Five Hundred Forty One Thousand Five Hundred 636 dollars ($10,541,500) or so much thereof as may be necessary are hereby appropriated from current 637 revenues and other funds for the use by several departments of the Municipal Government for 638 the fiscal year beginning July 1, 2014 and ending June 30, 2015: 639 CASH RECEIPTS 640 2014/15 2014/15 641 BUDGET REVISED 642 BEGINNING BALANCE $ 10,507,300 $ 10,465,800 643 INTEREST EARNINGS 75,700 75,700 644 TOTALS $ 10,583,000 $ 10,541,500 645 BUDGET SUMMARY 646 2014/15 2014/15 647 BUDGET REVISED 648 TRANSFER TO ELECTRIC FUND $ 2,000,000 $ 2,000,000 649 CURRENT YEAR BALANCE 8,583,000 8,541,500 650 TOTALS $ 10,583,000 $ 10,541,500 651 The City Manager is hereby authorized, without further approval of the City Council, to make 652 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 653 department with the exception of any transfers prohibited by City Procedure #F306. 654 ADOPTED: * 21

FIRST READING 655 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 656 WORKERS COMPENSATION FUND 657 CASH RECEIPTS/REVENUES AND BUDGET FOR 2014-2015 658 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 659 The amount hereinafter named aggregating One Million Six Hundred Twenty Four Thousand Four Hundred 660 dollars ($1,624,400) or so much thereof as may be necessary are hereby appropriated from current revenues 661 and other funds for the use by several departments of the Municipal Government for the fiscal year 662 beginning July 1, 2014 and ending June 30, 2015: 663 OPERATING REVENUES 664 2014/15 2014/15 665 BUDGET REVISED 666 PRIOR YEAR BALANCE $ 1,135,000 $ 1,123,300 667 INTEREST INCOME 10,600 10,600 668 PREMIUM FROM CITY 490,500 490,500 669 TOTALS $ 1,636,100 $ 1,624,400 670 OPERATING EXPENSES 671 2014/15 2014/15 672 BUDGET REVISED 673 PROGRAM EXPENSES/SUPPLIES - CLAIMS $ 450,000 $ 450,000 674 INSURANCE 92,600 92,600 675 BANK FEES 600 600 676 STATE OF DEL - SELF INSURANCE TAX 37,000 37,000 677 CONTRACTUAL SERVICES 57,000 57,000 678 TOTAL EXPENSES 637,200 637,200 679 CURRENT YEAR BALANCE 998,900 987,200 680 TOTALS $ 1,636,100 $ 1,624,400 681 The City Manager is hereby authorized, without further approval of the City Council, to make 682 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 683 department with the exception of any transfers prohibited by City Procedure #F306. 684 ADOPTED: * 22

FIRST READING 685 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 686 LIBRARY GRANT FUND 687 CASH RECEIPTS/REVENUES AND BUDGET FOR 2014-2015 688 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 689 The amount hereinafter named aggregating Three Hundred Twenty Six Thousand two Hundred dollars 690 ($326,200) or so much thereof as may be necessary are hereby appropriated from current revenues 691 and other funds for the use by several departments of the Municipal Government for the fiscal year 692 beginning July 1, 2014 and ending June 30, 2015: 693 OPERATING REVENUES 694 2014/15 2014/15 695 BUDGET REVISED 696 BEGINNING BALANCE $ 17,300 $ 44,800 697 STATE GRANT 274,100 278,900 698 FEDERAL GRANT - 2,500 699 TOTALS $ 291,400 $ 326,200 700 OPERATING EXPENSES 701 2014/15 2014/15 702 BUDGET REVISED 703 FURNITURE $ 2,000 $ 15,100 704 OFFICE SUPPLIES 24,000 28,000 705 PRINTING/DUPLICATING 8,900 14,000 706 AUDIO VISUAL SUPPLIES 74,000 75,100 707 BOOKS 128,900 132,600 708 PROGRAM EXPENSES/SUPPLIES 28,000 29,900 709 POSTAGE 100 100 710 TRAINING/CONF/FOOD/TRAV 3,500 3,500 711 CONTRACTUAL SERVICES - 900 712 OFFICE EQUIPMENT/REPAIRS & MAINT 2,000 6,000 713 COMPUTER HARDWARE 2,700 - 714 OTHER EQUIP - LEASE - 1,200 715 SUBTOTAL EXPENSES STATE GRANTS 274,100 306,400 716 PROGRAM EXPENSES/SUPPLIES - 2,500 717 SUBTOTAL EXPENSES FEDERAL GRANTS - 2,500 718 CURRENT YEAR BALANCE 17,300 17,300 719 TOTALS $ 291,400 $ 326,200 720 The City Manager is hereby authorized, without further approval of the City Council, to make 721 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 722 department with the exception of any transfers prohibited by City Procedure #F306. 723 ADOPTED: * 23

FIRST READING 724 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 725 POLICE GRANTS FUND 726 CASH RECEIPTS/REVENUES AND BUDGET FOR 2014-2015 727 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 728 The amount hereinafter named aggregating Six Hundred Eight Thousand Five Hundred dollars 729 ($608,500) or so much thereof as may be necessary are hereby appropriated from current revenues 730 and other funds for the use by several departments of the Municipal Government for the fiscal year 731 beginning July 1, 2014 and ending June 30, 2015: 732 OPERATING REVENUES 733 2014/15 2014/15 734 BUDGET REVISED 735 BEGINNING BALANCE $ 77,200 $ 172,100 736 STATE AND FEDERAL GRANTS 339,000 436,400 737 TOTALS $ 416,200 $ 608,500 738 OPERATING EXPENSES 739 2014/15 2014/15 740 BUDGET REVISED 741 CADET PROGRAM SALARIES AND BENEFITS - 17,900 742 POLICE EQUIPT & PROG SUPP 156,000 317,900 743 TECHNOLOGY EQUIPMENT 50,000 47,800 744 CELL PHONE CHARGES 15,000 15,000 745 TRAINING 32,000 45,000 746 AUDIT FEES 1,000 1,000 747 CONTRACTUAL SERVICES 6,000 10,200 748 SUBTOTAL EXPENSES 260,000 454,800 749 OPERATING TRANSFERS-OUT 124,000 124,000 750 SUBTOTAL FINANCING USES 124,000 124,000 751 CURRENT YEAR BALANCE 32,200 29,700 752 TOTALS $ 416,200 $ 608,500 753 The above budget represents the combination of all State & Federal Grants. 754 The City Manager is hereby authorized, without further approval of the City Council, to make 755 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 756 department with the exception of any transfers prohibited by City Procedure #F306. 757 ADOPTED: * 24

FIRST READING 758 2014-2015 BUDGET ORDINANCES - SECOND AMENDMENT (CONTINUED) 759 CDBG FUND 760 CASH RECEIPTS/REVENUES AND BUDGET FOR 2014-2015 761 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL MET: 762 The amount hereinafter named aggregating Two Hundred Eighty Six Thousand Three Hundred dollars 763 ($286,300) or so much thereof as may be necessary are hereby appropriated from current revenues 764 and other funds for the use by several departments of the Municipal Government for the fiscal year 765 beginning July 1, 2014 and ending June 30, 2015: 766 OPERATING REVENUES 767 2014/15 2014/15 768 BUDGET REVISED 769 BEGINNING BALANCE $ - $ 2,100 770 STATE AND FEDERAL GRANTS 235,000 284,200 771 TOTALS $ 235,000 $ 286,300 772 OPERATING EXPENSES 773 2014/15 2014/15 774 BUDGET REVISED 775 Prior year Closing cost/down payment program - 200 776 Prior year MHDC home repair - 2,000 777 Prior year Elizabeth W Murphey School - 1,200 778 Prior year Ncall Research Inc. - 2,300 779 Prior year Milford housing H/O rehab - 3,000 780 Current year closing cost/down payment program 102,800 102,800 781 Current year Dover interfaith ministry 27,500 27,500 782 Current year Elizabeth W Murphey school 50,000 50,000 783 Current year Ncall Research Inc. 7,700 7,700 784 Current year salaries 47,000 87,500 785 TOTAL EXPENDITURES 235,000 284,200 786 CURRENT YEAR BALANCE - 2,100 787 TOTALS $ 235,000 $ 286,300 788 The above budget represents the combination of all State & Federal Grants. 789 The City Manager is hereby authorized, without further approval of the City Council, to make 790 interdepartmental transfers of up to five percent of the amount hereinafter appropriated to any 791 department with the exception of any transfers prohibited by City Procedure #F306. 792 ADOPTED: * 25

City of Dover Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2014

Financial Statements  Government-wide Statement of Net Position (Page 5) – Includes all capital assets and liabilities. Does not include full-reporting of pension and OPEB liabilities as currently not required by GAAP. Two columns are shown.  First column for governmental activities which includes General Fund, Governmental Capital Project Fund, All Special Revenue (Grant) Funds. Worker’s Compensation Fund assets & liabilities are included.  Second column for business-type activities (Proprietary Funds). This column includes all activities related to the Water/Wastewater Utility and the Electric Utility.  Government-wide Statement of Activities (Page 6) – All activities (financial transactions) are reported on a GAAP (Generally Accepted Accounting Principles) basis. First column for city-wide expenses by function/program, second column is adjustment for allocation of indirect expenses, next three columns for program revenues and grants, far right three columns represent net program income/(expense) by fund type.  Governmental Fund Statements (Page 7, 8 & 9) – All General Fund and Grant Fund activities reported on a modified basis of accounting. No capital assets and no long-term liabilities. Considered, spendable resources within a year. Unassigned Fund Balance is adjusted for Unavailable revenue, prepaid items, and inventory.  Statement of Net Position and Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds (Pages 10 & 11) – All activities of the Water/Wastewater and Electric Funds.  Statement of Net Position and Changes in Net Position – Fiduciary Funds – All activities of the Pension and OPEB Trust Funds as required by GAAP. Not included in the previous statements mentioned as they have been established as separate Trust for retirement benefits (CAFR Page 48).  The audit opinion is based on these Financial Statements. 2

Deferred Outflows/Inflows of Resources  Government Accounting Standards Board issued Statement 63 – Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position  Definitions –  Net Position – The residual of all other financial statement elements presented in a statement of financial position. (Previously, Net Assets)  Deferred Outflows of Resources – the item meets the definition of an outflow of resources, but relates to a future period. An example would be a grant provided to a grantee before the grantee has met the related time requirements. The City had no deferred outflows of resources as of 6/30/14.  Deferred Inflows of Resources – Governmental funds defer recognition of revenue until amounts are considered to be available to liquidate the liabilities for the current period. Therefore, any past due revenues from prior periods must be eliminated and reported as unavailable revenue. The City had unavailable revenue (past due receivables over 60 days) of $726,946 as of June 30, 2014, which includes $38,011 of CDBG/NSP grant funds. The General Fund components of receivables are property taxes, demolitions, grass cutting, trash fees, and police extra duty.  Unearned Revenue – Resources that are received for a future period prior to meeting eligibility requirements. Examples are property taxes and business licenses received in June for the following fiscal year. The City had unearned revenue as of 6/30/14 of $1,188,022. 3

Schedules & Combining Statements  Schedules are budgetary reports prepared on a non-GAAP basis. For example, the City does not budget depreciation expense or compensated absence expense.  The General Fund Budget to Actual report for June 30, 2014 is located in Required Supplementary Information section of the CAFR, which follows the Notes to the Financial Statements. All other individual fund Budget to Actual Reports are located in the Supplementary Information section of the CAFR. These schedules are not required and therefore not required to be audited. We include these schedules and the auditor’s do review them as they include budgets adopted by City Council.  The Supplementary Information section also includes combining statements. These are financial statements that combines the individual fund statements. For example, the Special Revenue Combining Statement of Net Position. This statement combines all the grant funds and the total is reported in the audited Financial Statement Section – Part C of the CAFR. 4

5

6

7

Fund Balances (Note 7) – June 30, 2014 8

9

10

11

Changes in Net Assets Governmental Activities June 30, 2014 Governmental Activities Governmental net position decreased by $1.3 million. Net revenues of $26.3 million were less than the prior year by $1.0 million. Operating and Capital Grants decreased $1.6 million from the prior year mainly due to less federal highway projects requiring police staffing and the completion of the Library. This decrease was mainly offset by increases in building permits and transfer taxes. Expenses of $36.1 million reflects an overall increase of $0.5 million from the prior year. The increases were attributed to operating cost for police personnel $0.2 million, an increase in the appropriation to the Police Pension Fund of $0.3 million, and $0.2 million of increases in insurance premiums and legal fees. These increases were offset by $0.2 million of reduced cost across several other programs. A change in accounting for pension contributions towards the unfunded liabilities resulted in increases to several programs with a corresponding decrease in the item “Appropriation to Pension Fund” of $1.0 million and an increase in indirect service expenses of $0.4 million. Transfers to the Governmental Funds from the Proprietary Funds decreased $2.0 million which represents a prior year contribution towards street and storm water infrastructure at the Garrison Oak Technical Park. These improvements are necessary for the construction of the Calpine 305 megawatt electric generating facility. 12

Changes in Net Assets Business Type Activities June 30, 2014 Business-Type Activities The business-type activities saw a negative change in net position of $0.4 million. Both utilities experienced a decrease in revenues which resulted in a combined net decrease of $10.2 million. The utilities expenses when combined increased in total by $0.4 million. The water/wastewater utility had a positive change in net position of $2.0 million. The utility experienced a decrease in operating income of $0.1 million from the previous year related to impact fees, an increase of $0.4 million of capital grants and developer contributions and an increase $0.1 million of investment earnings. The utility experienced an increase in operating expenses of $0.3 million attributed to debt service $0.2 million and Kent County Treatment Fees $0.1 million. The electric utility realized a negative change in net position of $2.3 million. The utility experienced a decrease in operating income of $11.2 million from the previous year as a result of a reduction in electric rates and lower consumption. The electric utility also experienced a significant increase over budget in power supply and generation cost ($6.7 million) due to extreme winter weather conditions and its impact on the availability of fuel to run the power plant along with the effects on pricing in the PJM ISO region. As a result an additional $3.0 million over the budgeted $4.0 million was transferred from the rate stabilization reserve to cover the unplanned increase in power supply cost. Operating expenses decreased as well in total by $0.3 million. An increase of $0.8 million for OPEB contributions was offset by $1.1 million decrease in personnel cost attributed to retirements and vacant positions. Interest and fiscal charges decreased by $0.3 million. A change in accounting for pension contributions for the unfunded liabilities resulted in increases to several programs with a corresponding decrease in the item “Pension Unfunded Liability” of $0.3 million for the water/wastewater utility and $1.3 million for the electric utility and an increase in the indirect expense allocations of $0.4 million. 13

General Fund Budget Highlights – Fiscal Year 2014  The Final General Fund Budget incorporated the following changes to the Original Budget –  The Budget Balance carried forward from the prior fiscal year was higher by $0.8 million than was projected. Receipts had a net increase of approximately $0.8 million. The most significant increases were related to intrafund service receipts related to the accounting change for pensions, transfer taxes, court of chancery fees, and building permits. The most significant reductions were police extra duty fees and civil traffic penalties. (See CAFR pages 91 & 92 for more details)  Expenditures were revised to reflect an aggregate increase of $1.1 million. Increased employer contributions to the Police and Employee Pension funds accounted for most of the increased budget expense with a slight increased in the transfer to the capital project fund. The increases were offset by decreases in street lights, insurance, police pension grants and fire services. The net result of these changes was a $0.5 million increase in the revised budget balance over the Original Budget Balance (on a non-GAAP basis).  General Fund actual revenues and other financing sources matched the final total revenues with a $23,000 positive variance.  The more significant positive variances were attributed to construction permits and transfer taxes. The most significant negative variances in actual revenue were intrafund service fees and police extra duty fees.  Expenditures were approximately $0.9 million under budget as a result of several operating departments experiencing personnel savings through attrition. An increase in legal fees for collective bargaining negotiations was absorbed with favorable personnel results. The General Fund budget balance carry forward was $0.9 million higher than budgeted as a result of the above variances. 14

Other Post Employment Benefits (OPEB) The City is following a 10 year funding plan to phase in the full required contributions. The City has completed its 6th year of the 10 year plan, therefore the funding level is 60% of the required level. The Electric Fund is being funded at its full required funding level. 15

Pension Plans – Defined Benefit GASB 67 has been implemented in FY14. GASB 68 Pension standards will be implemented in FY15 and will cause significant changes in the unfunded liabilities and how we report the pension fund activity. See Presentation to City Council on January 7, 2013. GASB 68 effective FYE 2015 GASB will be following up with the similar changes for OPEB Liabilities 16

Material Commitments & Subsequent Events Material Commitments – Note 11  Commitments for payments on fire apparatus currently for Ladder 1 - $145,614 and Ladder 2 - $92,910 (Ladder 2 paid in full in FY15)  Five year contract with The Energy Authority (TEA)  Extended contract with North American Energy Services (NAES)  Guarantee on $1.3 million loan held by Downtown Dover Partnership. Forward Contracts – Note 12  Third party contracts for power supply  Maximum amount of loss due to credit risk w/o respect to Collateral dollars – $13.8 million Subsequent Events – Note 13  Series 2014 General Obligation Debt with PNC – $4,135,000 17

Financial Statements  Government-wide Statement of Net Position (Page 5) – Includes all capital assets and liabilities. Does not include full-reporting of pension and OPEB liabilities as currently not required by GAAP. Two columns are shown.  First column for governmental activities which includes General Fund, Governmental Capital Project Fund, All Special Revenue (Grant) Funds. Worker’s Compensation Fund assets & liabilities are included.  Second column for business-type activities (Proprietary Funds). This column includes all activities related to the Water/Wastewater Utility and the Electric Utility.  Government-wide Statement of Activities (Page 6) – All activities (financial transactions) are reported on a GAAP (Generally Accepted Accounting Principles) basis. First column for city-wide expenses by function/program, second column is adjustment for allocation of indirect expenses, next three columns for program revenues and grants, far right three columns represent net program income/(expense) by fund type.  Governmental Fund Statements (Page 7, 8 & 9) – All General Fund and Grant Fund activities reported on a modified basis of accounting. No capital assets and no long-term liabilities. Considered, spendable resources within a year. Unassigned Fund Balance is adjusted for Unavailable revenue, prepaid items, and inventory.  Statement of Net Position and Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds (Pages 10 & 11) – All activities of the Water/Wastewater and Electric Funds.  Statement of Net Position and Changes in Net Position – Fiduciary Funds – All activities of the Pension and OPEB Trust Funds as required by GAAP. Not included in the previous statements mentioned as they have been established as separate Trust for retirement benefits (CAFR Page 48).  The audit opinion is based on these Financial Statements. 2

Deferred Outflows/Inflows of Resources  Government Accounting Standards Board issued Statement 63 – Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position  Definitions –  Net Position – The residual of all other financial statement elements presented in a statement of financial position. (Previously, Net Assets)  Deferred Outflows of Resources – the item meets the definition of an outflow of resources, but relates to a future period. An example would be a grant provided to a grantee before the grantee has met the related time requirements. The City had no deferred outflows of resources as of 6/30/14.  Deferred Inflows of Resources – Governmental funds defer recognition of revenue until amounts are considered to be available to liquidate the liabilities for the current period. Therefore, any past due revenues from prior periods must be eliminated and reported as unavailable revenue. The City had unavailable revenue (past due receivables over 60 days) of $726,946 as of June 30, 2014, which includes $38,011 of CDBG/NSP grant funds. The General Fund components of receivables are property taxes, demolitions, grass cutting, trash fees, and police extra duty.  Unearned Revenue – Resources that are received for a future period prior to meeting eligibility requirements. Examples are property taxes and business licenses received in June for the following fiscal year. The City had unearned revenue as of 6/30/14 of $1,188,022. 3

Schedules & Combining Statements  Schedules are budgetary reports prepared on a non-GAAP basis. For example, the City does not budget depreciation expense or compensated absence expense.  The General Fund Budget to Actual report for June 30, 2014 is located in Required Supplementary Information section of the CAFR, which follows the Notes to the Financial Statements. All other individual fund Budget to Actual Reports are located in the Supplementary Information section of the CAFR. These schedules are not required and therefore not required to be audited. We include these schedules and the auditor’s do review them as they include budgets adopted by City Council.  The Supplementary Information section also includes combining statements. These are financial statements that combines the individual fund statements. For example, the Special Revenue Combining Statement of Net Position. This statement combines all the grant funds and the total is reported in the audited Financial Statement Section – Part C of the CAFR. 4

5

6

7

Fund Balances (Note 7) – June 30, 2014 8

9

10

11

Changes in Net Assets Governmental Activities June 30, 2014 Governmental Activities Governmental net position decreased by $1.3 million. Net revenues of $26.3 million were less than the prior year by $1.0 million. Operating and Capital Grants decreased $1.6 million from the prior year mainly due to less federal highway projects requiring police staffing and the completion of the Library. This decrease was mainly offset by increases in building permits and transfer taxes. Expenses of $36.1 million reflects an overall increase of $0.5 million from the prior year. The increases were attributed to operating cost for police personnel $0.2 million, an increase in the appropriation to the Police Pension Fund of $0.3 million, and $0.2 million of increases in insurance premiums and legal fees. These increases were offset by $0.2 million of reduced cost across several other programs. A change in accounting for pension contributions towards the unfunded liabilities resulted in increases to several programs with a corresponding decrease in the item “Appropriation to Pension Fund” of $1.0 million and an increase in indirect service expenses of $0.4 million. Transfers to the Governmental Funds from the Proprietary Funds decreased $2.0 million which represents a prior year contribution towards street and storm water infrastructure at the Garrison Oak Technical Park. These improvements are necessary for the construction of the Calpine 305 megawatt electric generating facility. 12

Changes in Net Assets Business Type Activities June 30, 2014 Business-Type Activities The business-type activities saw a negative change in net position of $0.4 million. Both utilities experienced a decrease in revenues which resulted in a combined net decrease of $10.2 million. The utilities expenses when combined increased in total by $0.4 million. The water/wastewater utility had a positive change in net position of $2.0 million. The utility experienced a decrease in operating income of $0.1 million from the previous year related to impact fees, an increase of $0.4 million of capital grants and developer contributions and an increase $0.1 million of investment earnings. The utility experienced an increase in operating expenses of $0.3 million attributed to debt service $0.2 million and Kent County Treatment Fees $0.1 million. The electric utility realized a negative change in net position of $2.3 million. The utility experienced a decrease in operating income of $11.2 million from the previous year as a result of a reduction in electric rates and lower consumption. The electric utility also experienced a significant increase over budget in power supply and generation cost ($6.7 million) due to extreme winter weather conditions and its impact on the availability of fuel to run the power plant along with the effects on pricing in the PJM ISO region. As a result an additional $3.0 million over the budgeted $4.0 million was transferred from the rate stabilization reserve to cover the unplanned increase in power supply cost. Operating expenses decreased as well in total by $0.3 million. An increase of $0.8 million for OPEB contributions was offset by $1.1 million decrease in personnel cost attributed to retirements and vacant positions. Interest and fiscal charges decreased by $0.3 million. A change in accounting for pension contributions for the unfunded liabilities resulted in increases to several programs with a corresponding decrease in the item “Pension Unfunded Liability” of $0.3 million for the water/wastewater utility and $1.3 million for the electric utility and an increase in the indirect expense allocations of $0.4 million. 13

General Fund Budget Highlights – Fiscal Year 2014  The Final General Fund Budget incorporated the following changes to the Original Budget –  The Budget Balance carried forward from the prior fiscal year was higher by $0.8 million than was projected. Receipts had a net increase of approximately $0.8 million. The most significant increases were related to intrafund service receipts related to the accounting change for pensions, transfer taxes, court of chancery fees, and building permits. The most significant reductions were police extra duty fees and civil traffic penalties. (See CAFR pages 91 & 92 for more details)  Expenditures were revised to reflect an aggregate increase of $1.1 million. Increased employer contributions to the Police and Employee Pension funds accounted for most of the increased budget expense with a slight increased in the transfer to the capital project fund. The increases were offset by decreases in street lights, insurance, police pension grants and fire services. The net result of these changes was a $0.5 million increase in the revised budget balance over the Original Budget Balance (on a non-GAAP basis).  General Fund actual revenues and other financing sources matched the final total revenues with a $23,000 positive variance.  The more significant positive variances were attributed to construction permits and transfer taxes. The most significant negative variances in actual revenue were intrafund service fees and police extra duty fees.  Expenditures were approximately $0.9 million under budget as a result of several operating departments experiencing personnel savings through attrition. An increase in legal fees for collective bargaining negotiations was absorbed with favorable personnel results. The General Fund budget balance carry forward was $0.9 million higher than budgeted as a result of the above variances. 14

Other Post Employment Benefits (OPEB) The City is following a 10 year funding plan to phase in the full required contributions. The City has completed its 6th year of the 10 year plan, therefore the funding level is 60% of the required level. The Electric Fund is being funded at its full required funding level. 15

Pension Plans – Defined Benefit GASB 67 has been implemented in FY14. GASB 68 Pension standards will be implemented in FY15 and will cause significant changes in the unfunded liabilities and how we report the pension fund activity. See Presentation to City Council on January 7, 2013. GASB 68 effective FYE 2015 GASB will be following up with the similar changes for OPEB Liabilities 16

Material Commitments & Subsequent Events Material Commitments – Note 11  Commitments for payments on fire apparatus currently for Ladder 1 - $145,614 and Ladder 2 - $92,910 (Ladder 2 paid in full in FY15)  Five year contract with The Energy Authority (TEA)  Extended contract with North American Energy Services (NAES)  Guarantee on $1.3 million loan held by Downtown Dover Partnership. Forward Contracts – Note 12  Third party contracts for power supply  Maximum amount of loss due to credit risk w/o respect to Collateral dollars – $13.8 million Subsequent Events – Note 13  Series 2014 General Obligation Debt with PNC – $4,135,000 17

COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2014

For the Fiscal Year Ended June 30, 2014 Prepared by the Finance Department Donna S. Mitchell, Controller/Treasurer

ACKNOWLEDGEMENTS The City of Dover’s Comprehensive Annual Financial Report was prepared by the Finance Department. Tracey Lisiecki, Financial Reporting & Accounting Manager Lori Peddicord Assistant Finance Director Jeffrey Dill Accountant II Jennifer Helms Accountant II Sharon Daniel Account Clerk II Katie Heffington Payroll Specialist Hollie Ford Human Resources – Administrative Assistant Special appreciation to: Special appreciation is extended to Mr. Scott Koenig, City Manager and all personnel throughout the City for their continued support of the Finance Department.

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Table of Contents CITY OF DOVER, DELAWARE Comprehensive Annual Financial Report For the Year Fiscal Ended June 30, 2014 TABLE OF CONTENTS INTRODUCTORY SECTION PAGE Letter of Transmittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Certificate of Achievement for Excellence in Financial Reporting . . . . . . . . . . . . . 7 Mayor and Council Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 List of Elected Officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 List of Appointed Officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 List of Commissions & Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Organization Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 The City of Dover Vision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 FINANCIAL SECTION PART A - Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . 18 PART B - Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . 23 PART C - Basic Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Government-wide Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Statement of Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Statement of Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Fund Financial Statements Balance Sheet - Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities . . . . . . . . . . 44 Statement of Net Position-Proprietary Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Statement of Revenues, Expenses and Changes in Fund Net Position- Proprietary Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Statement of Cash Flows-Proprietary Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 i

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Table of Contents FINANCIAL SECTION – CONTINUED PAGE Statement of Net Position Fiduciary Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Statement of Changes in Net Position Fiduciary Funds . . . . . . . . . . . . . . . . . . . . 49 Notes to Financial Statements Index to Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Part D - Required Supplementary Information General Fund-Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Notes to Required Supplementary Information Governmental Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Police Pension Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 General Employee Pension Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Other Postemployment Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Part E - Supplementary Information General Fund Combining Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Combining General Fund Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Combining Statement of Revenues, Expenditures and Changes in Fund Balances of the General Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 Governmental Capital Projects Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Special Revenue Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 Special Revenue Funds Combining Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . 107 Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Unreserved Fund Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 Police Grants - Schedule of Revenues, Expenditures and Changes in Unreserved Fund Balance – Budget (Non-GAAP Basis) and Actual . . . . . . . . . . . 109 ii

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Table of Contents FINANCIAL SECTION – CONTINUED PAGE Library Grants - Schedule of Revenues, Expenditures and Changes in Unreserved Fund Balance - Budget (Non-GAAP Basis) and Actual . . . . . . . . . . . 110 Municipal Street Aid Fund - Schedule of Revenues, Expenditures and Changes in Unreserved Fund Balance - Budget (Non-GAAP Basis) and Actual . . . . . . . . . 111 Housing Programs – CDBG & NSP – Schedule of Revenues, Expenditures and Changes in Unreserved Fund Balance – Budget (Non-GAAP Basis) and Actual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 State of Delaware Department of Transportation Grants - Schedule of Revenues, Expenditures and Changes in Unreserved Fund Balance – Budget (Non-GAAP Basis) and Actual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 Proprietary Fund Types - Enterprise Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 Water/Wastewater Fund - Schedule of Revenues and Expenses-Budget (Non-GAAP Basis) and Actual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Water/Wastewater Improvement & Extension Fund-Schedule of Revenues and Expenses-Budget (Non-GAAP Budget) and Actual . . . . . . . . . . . . . . . . . . . . . . . . 116 Electric Revenue Fund - Schedule of Revenues and Expenses - Budget (Non- GAAP Basis) and Actual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Electric Improvement & Extension Fund Schedule of Revenues and Expenses – Budget (Non-GAAP Basis) and Actual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Proprietary Fund Types - Internal Service Funds . . . . . . . . . . . . . . . . . . . . . . . 119 Worker’s Compensation - Schedule of Revenues and Expenses Budget (Non- GAAP Basis) and Actual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Fiduciary Fund Types and Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 All Agency Funds - Combining Statement of Changes in Assets and Liabilities . . 122 STATISTICAL SECTION Statistical Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Net Position by Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 Changes in Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 Fund Balances of Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 Changes in Fund Balances of Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . 130 iii

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Table of Contents STATISTICAL SECTION - CONTINUED PAGE Governmental Activities Tax Revenues by Source . . . . . . . . . . . . . . . . . . . . . . . . 132 Assessed and Estimated Actual Value of Taxable Property . . . . . . . . . . . . . . . . . 133 Property Tax Rates - All Direct and Overlapping Governments with the Capital School District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 Principal Tax Payers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Property Tax Levies and Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 Ratios of Outstanding Debt by Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 Ratio of Net General Obligation Bonded Debt To Assessed Value & Net Bonded Debt Per Capita . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 Computation of Direct and Overlapping Debt with the Capital School District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 Computation of Legal Debt Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 Revenue Bond Coverage - Electric Revenue Bonds . . . . . . . . . . . . . . . . . . . . . . . 142 Revenue Bond Coverage - Water/Wastewater Bonds . . . . . . . . . . . . . . . . . . . . . . 143 Demographic and Economic Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 Major Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 Full-time Equivalent City Government Employees by Function . . . . . . . . . . . . . . . 146 Operating Indicators and Capital Assets Used in Operations Schedule of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 Summary of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 iv

INTRODUCTORY SECTION THIS SECTION INCLUDES THE FOLLOWING: LETTER OF TRANSMITTAL CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING LIST OF ELECTED OFFICIALS LIST OF APPOINTED OFFICIALS LIST OF COMMISSIONS & COMMITTEES ORGANIZATION CHART VISION

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December 16, 2014 The Honorable Mayor, Honorable Council President, Members of the City Council and Citizens of the City of Dover Dover, Delaware 19901 Ladies and Gentlemen: I am pleased to submit the Comprehensive Annual Financial Report of the City of Dover for the fiscal year ended June 30, 2014. This report is published to comply with the provisions of Article IV, Section 46 of the City Charter. It is also intended to provide financial data to the tax and ratepayers, bondholders, trustees, banks, federal and state agencies and the financial community at large. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. The financial statements in this report have been audited by SB & Company, LLC, an independent firm of certified public accountants as required by Section 46 of the City Charter. SB & Company, LLC has provided an unmodified opinion on the City of Dover financial statements for the year ended June 30, 2014. The independent public accountant’s report is located at the front of the financial section of this report. Management’s Discussion and Analysis (MD&A) provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. Our MD&A can be found immediately following the report of our independent auditors. THE REPORTING ENTITY AND ITS SERVICES The City of Dover was incorporated in 1829 under a Charter granted by the General Assembly. Dover is the Capital of the State of Delaware and is located in the central part of the state. It is home to the State Governor’s office, legislative offices, and is the County seat for Kent County. P.O. Box 475 Dover, DE 19903-0475 Community Excellence Through Quality Service

The City currently occupies a land area of 23.3 square miles and serves a population of approximately 37,540. Dover’s governing body is composed of a Mayor and nine Council Members, with one Council Member elected by Council to serve as Council President. Two members of City Council are elected from each of the four districts; the ninth Council member of Council and the Mayor are elected at-large The Council is responsible for all matters of policy and is the authority for levying taxes, securing revenues, authorizing expenditures of City funds and incurring City debts. The City of Dover operates under a Council – Manager Form of government. The City provides a full range of services as mandated by the Charter or adopted by the City Council. They include police protection, street and sanitation maintenance, recreation, library, community development, economic development, public improvements, planning and zoning, safety inspections, electric power generation and distribution, water and wastewater services, legislative services and general administration. Within the City is a volunteer fire company that is autonomous. Under established criteria, the operations of the Robbins Hose Fire Company are not a part of this report. However, the City provides financing for dispatching personnel costs, most of the building and equipment maintenance, supplies and contractual services. The City also provides funding to Robbins Hose for payments on several pieces of firefighting apparatus. These payments are grouped under the Fire Department and are included in the General Fund. The Fire Chief is elected by the volunteer members of the Fire Company. The City Council traditionally adopts the election and the City Council officially appoints the Fire Chief for a one-year term. Therefore, the position of Fire Chief is included in the City organization chart. The Capital School District does not meet the established criteria for inclusion in the reporting entity and, accordingly, is excluded from this report. The City Council shall, on or before the second Monday of June in each year, adopt a budget for the succeeding fiscal year. This annual budget serves as the foundation for the City of Dover’s financial planning and control. The budget is prepared by fund and department. With approval of the City Manager and Controller/Treasurer, Department Heads may transfer resources within or between departments, with the exception of capital project budgets. Transfers between funds and transfers of capital project budgets, however, need special approval from the City Council. ECONOMIC CONDITION AND FUTURE GROWTH The City of Dover is distinguished as the dominant center of employment, commerce, educational opportunity, and cultural activity in central Delaware. Development activity in the Capital City continued to be slow during Fiscal Year 2014, consistent with the economic trends seen nationwide and recent prior years; however there have been some signs of modest economic growth. Residential growth continues to occur at a slow pace, and major institutions and government agencies continue to expand to meet the demands of a growing regional population and economy. Commercial corridor areas of U.S. Routes 13 and 113 and DE Route 8 have continued to be the center of commerce in Dover, and in the past year progress has been made in expanding commercial services in this area. Efforts to revitalize the traditional urban core of downtown Dover have continued, and the passage of the State’s Downtown Development District program offers promise for economic growth in downtown Dover looking ahead. Total value of construction was estimated at $92.8 million during Fiscal Year 2014. This nearly doubled the $51.7 million in construction value during Fiscal Year 2013. The City of Dover issued 4,282 business licenses in Fiscal Year 2014, an increase over the prior year. Building permits issued during this period totaled 978 which only one permit different than the previous year. The City of Dover Planning Office 2

processed 39 new development applications (site plans, subdivisions and conditional uses) and five rezoning applications during the reporting period, which is a slight increase from the prior fiscal year. The City also processed two annexation requests during Fiscal Year 2014, which is consistent with the number in the prior fiscal year. Growth and development trends during Fiscal Year 2014 are further discussed and summarized below: POPULATION GROWTH The 2010 U.S. Decennial Census, which was conducted in April 2010, found that 36,054 people reside in Dover. The Delaware Population Consortium estimates, the City of Dover’s population as of July 1, 2014 was 37,540. This change represents a 4.1% population increase over the decennial Census. RESIDENTIAL DEVELOPMENT A total of 40 new residential housing starts were recorded during Fiscal Year 2014, which represents an increase of seven from the prior fiscal year. Construction activity resumed in Nottingham Meadows and continued in Senators Lake, Clearview Meadows, and Patriot Village. By the end of the fiscal year, bids were sought for the completion of infrastructure in the Village of Cannon Mill, with plans for the City to complete the infrastructure in Fiscal Year 2015. The apartment market continued to be strong in Fiscal Year 2014, with progress made on completing plans for Leander Lakes and the third building at The Grande being completed. DOWNTOWN DOVER REDEVELOPMENT Efforts to revitalize Downtown Dover remained strong, with the completion of the renovations to 22-24 West Loockerman Street for the new EZ Pass Customer Service Center. The pocket park constructed at the corner of North Street and Governors Avenue, in the location of a former vacant building, was underway as the fiscal year closed. Other new tenants continued to move into downtown tenant spaces. City staff worked closely with the Governor’s Office in spring and summer 2014 to support the Governor’s Downtown Development District legislation, which has the potential to provide additional private and public investment in downtown revitalization. The spirit of downtown remained strong, with First Friday festivities, and a number of other special events, celebrations and parades held throughout the year. The Planning Office, Economic Development Office, and Police Department worked with a steering committee convened by NCALL on Restoring Central Dover: Our Vision for Vitality. This is a planning process funded largely through the Wells Fargo Regional Foundation that has involved a broad cross section of stakeholders in plans to restore central Dover to its former vibrant city center. The plan document would be completed in fall 2014 and would serve as the centerpiece of the City’s Downtown Development District application. INSTITUTIONAL DEVELOPMENT Institutional development has continued during fiscal year 2014. Wesley College completed renovations to the former Frear Federal Building and opened the building as its Health Sciences campus. Dover High School neared completion for the 2014-15 school year. Delaware State University began construction of its Optics building and proceeded with other campus improvements. Delaware State University also opened the former Sheraton Hotel and Conference Center as a dormitory and was in the process of completing renovations to the building for the Early College High School in anticipation of the 2014-15 school year. RETAIL/COMMERCIAL DEVELOPMENT The retail sector remained slow during Fiscal Year 2014, as is consistent with the national economic slowdown and the trend of recent years. However, Dick’s Sporting Goods, the Greene Turtle, and Redner’s Supermarket opened during the fiscal year. While permit activity was slow in this sector, site plans are moving forward to redevelop the former Playtex site at the corner of Division Street and North DuPont Highway. Progress on this project was made in FY 2014. 3

INDUSTRIAL DEVELOPMENT The Dover economy derives considerable benefits from a variety of large industrial and manufacturing companies including Kraft Foods, Procter and Gamble, Energizer (Playtex Family Products), and Berry Van Lines, as well as numerous small to mid-sized industrial entities. Construction continued on the Garrison Energy Center, and the infrastructure associated with the Garrison Oak Technical Park began during FY2014, as did construction on the Uzin Utz Manufacturing facility in Garrison Oak. OFFICE DEVELOPMENT Dover’s dominance as the place for business office locations downstate has continued; however, the market appears to be saturated with office space at this point in time. The recently completed State Street Commons remains vacant, but that vacancy relates to issues beyond simply the market for office space. INFRASTRUCTURE The City has several large water and sewer projects underway to upgrade pump stations, distribution and transmission mains. These projects will improve water quality and reduce the inflow/infiltration in our sewer system. The City continues to upgrade the electric transmission and distribution system with systematic upgrades to substations and the transfer of overhead distribution lines to underground lines in the electric territory subdivisions. The City and the State has several transportation projects underway. Summary Dover continues to be affected by the nation’s economic downturn; however, small signs of modest growth are evident. The large institutional presence of Bayhealth, the State, and the colleges and universities helps to strengthen the City’s economy. The development of the Garrison Oak Technical Park is also a benefit to the local economy. Dover remains a center for commerce, services and residential communities. As the economy rebounds, Dover is well positioned to support continued growth, and the promise associated with the State’s Downtown Development District program creates an optimistic future for the City of Dover. LONG-TERM FINANCIAL PLANNING AND MAJOR INITIATIVES The City is in its second year of the infrastructure build out of the Garrison Oak Technology Park “GOTP” which will service as a technology and industrial park. The design of the GOTP subdivision includes fifteen parcels of which two are leased and one was sold this past year to Uzin Utz a German manufacturer of flooring compounds. The Dover Sun Park has occupied one of the parcels since 2010 and the Calpine 305 megawatt electric generating station has been under construction since fiscal year 2013 with an expected completion date of May 2015. The City Council continues its focus on replacing or upgrading old infrastructure in order to improve the quality and reliability of our utility systems. In fiscal year 2014, $1.9 million of water and wastewater capital improvements were completed. This included the completion of the Route 13 water main three pump station upgrades, and two well head replacements. The electric utility completed capital improvements of $3.2 million in fiscal year 2014. The major initiatives completed by our Transmission and Distribution crews were the completion of substation upgrades to the McKee Run and Lebanon stations, system upgrades to capacitors, lighting, and upgrades to 69kv switches. Several new services were also completed. The City’s plant operator, North American Energy Services, completed the replacement of the industrial water wastewater system at the McKee Run generating plant. The Unit 3 turbine inspection was completed. The City maintains a five-year Capital Investment Plan which serves as its planning and budgeting tool to program upgrades and replacements to its equipment, facilities, and infrastructure. As part of this process, operating expenses are identified and funding sources are determined. Managers are required 4

to rank capital expenditures by criticality based on the impacts on customer service and revenue losses. The fiscal year 2014/2015 Capital Investment Plan includes $1.7 million for vehicles and equipment and $13.5 million of infrastructure and utility improvement projects. The Capital Investment Plan is presented to City Council each year during the budget workshops and the final plan is approved by City Council along with the annual budget. FINANCIAL POLICIES AND FINANCIAL PLANNING Unassigned fund balances in the General Fund (11.7%) fall within the policy guidelines of a minimum of 8% and maximum of 12% of budgetary revenues as approved by City Council in the City of Dover Financial policies. The water, wastewater, and electric utilities have the same policy requirement for their budget balances. If the balances fall below 8%, the City Manager is required to submit budgets to bring the balances up to minimum within three years. The current budget balances as of June 30, 2014 for the utilities are water (13.1%) and wastewater (6.4%). The water and wastewater utilities are accounted for in the same fund and have a combined budget balance of 9.1%. The electric utility ended the year with a budget balance less than the 8.0% at 7.6%. This was attributed to higher than projected power supply and generation cost attributed to the unusual cold weather in January and February. The fiscal year 2015 budget will be adjusted to address the shortfall. The City policies also require non-recurring revenues to be set aside for capital improvements as designated by City Council (reserve accounts) and a 2% contingency reserve in the General Fund, Water/Wastewater Fund and 1% contingency in the Electric Revenue Fund to address unforeseeable natural disasters and insurance losses. All major funds meet the contingency reserve requirement. The water and wastewater utilities impose impact fees, which are reserved by ordinance, on new developments or facilities to assist with financing future expansion projects. The electric utility maintains depreciation and future capacity reserves to assist with asset replacements and system expansions. Financial policies require the electric utility to maintain a minimum of $10.0 million in each of these reserves, with replenishment over seven years when used to finance projects. The City’s Financial Policies also include an Electric Rate Stabilization Reserve account. The purpose of this reserve is to enable the City to absorb month-to-month power supply cost increases while adjusting budgets and implementing potential rate increases. If the cost of power supply decreases, the reserve can also be used to provide a power cost adjustment decrease to maintain competitive rates. The goal is to maintain a reserve balance equivalent to 10% of the power supply cost. AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Dover, Delaware for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2013. This was the twenty-ninth (29) consecutive year that the City of Dover has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report. The report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. 5

The Finance Department extends our thanks to you for your continued interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. I also express my appreciation to the many City employees for their assistance and cooperation during the year in preparation of this report. My appreciation is extended to Mrs. Ann Marie Townshend, City Planner for her assistance with the preparation of the local economy section and Ms. Hollie Ford for her support in the preparation of the annual report. Special appreciation is extended to the employees of the Finance Department, whose pride and dedicated service continues to make this report and each year a success. Respectfully submitted, Donna S. Mitchell, CPA Controller/Treasurer 6

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section 7

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section Mayor Robin R. Christiansen City Council Members 1st Row: Councilman at Large Timothy A. Slavin, First District: Beverly Williams and James L. Hutchison 2nd Row: Second District: William F. Hare and Adam M. Perza. Third District: Council President David L. Bonar and Sean M. Lynn 3rd Row: Fourth District: David L. Anderson and Wallace R. Dixon 8

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section CITY OF DOVER, DELAWARE List of Elected Officials June 30, 2014 9

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section CITY OF DOVER, DELAWARE List of Appointed Officials June 30, 2014 10

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section CITY OF DOVER, DELAWARE List of Commissions & Committees June 30, 2014 11

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section CITY OF DOVER, DELAWARE Organization Chart June 30, 2014 12

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Introductory Section THE CITY OF DOVER, DELAWARE VISION The City of Dover is a place where people want to live! Through the team effort of its elected officials, employees, and citizens, Dover is a clean and safe community, with a future of balanced growth and opportunity where all citizens are heard, enjoy a high quality of life, and diversity is valued. 13

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FINANCIAL SECTION THIS SECTION INCLUDES THE FOLLOWING: PART A REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS PART B MANAGEMENT’S DISCUSSION AND ANALYSIS PART C BASIC FINANCIAL STATEMENTS Government-wide Financial Statements Fund Financial Statements Notes to Financial Statements PART D REQUIRED SUPPLEMENTARY INFORMATION PART E SUPPLEMENTARY INFORMATION Combined Fund Statements Budgetary Schedules

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FINANCIAL SECTION PART A REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS The Honorable Mayor and Members of the City Council of Dover, Delaware Dover, Delaware Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Dover (the City), as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements The City’s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 200 International Circle • Suite 5500 • Hunt Valley • Maryland 21030 • P 410-584-0060 • F 410-584-0061 18

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2014, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that management’s discussion and analysis; the general fund – schedule of revenues, expenditures, and changes in fund balances – budget and actual; schedules of change in net pension liability, related ratios, and investment returns, and the schedules of employer contributions for the general pension plans funds and police pension fund; and the schedule of funding status and progress for other postemployment plan; be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying introductory section, combining and individual fund statements, budgetary comparison schedules, and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. 19

The accompanying combining and individual fund statements and budgetary comparison schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. Hunt Valley, Maryland December 16, 2014 20

FINANCIAL SECTION PART B MANAGEMENT’S DISCUSSION AND ANALYSIS

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2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Management’s Discussion & Analysis - Part B The City of Dover Management’s Discussion and Analysis For the Year Ended June 30, 2014 The City of Dover management offers readers of the City of Dover financial statements this narrative overview and analysis of the financial activities of the City of Dover for the fiscal year ended June 30, 2014. Readers are encouraged to consider the information included in Management’s Discussion and Analysis along with additional information that we have presented in our letter of transmittal, which can be found on pages 1-6 of this report. Financial Highlights Total assets of the City exceeded its liabilities by $218.1 million (net position). Of this amount, $29.0 million was reported as “unrestricted net position” which represents the amount available to meet the City’s ongoing obligations to citizens and creditors. The general government reported a deficit of $7.1 million and the business type activities, Water/Wastewater and Electric funds, reported $36.1 million of positive unrestricted net position. The governmental activities have been negatively impacted by the net obligation for other post-employment benefits. The difference between the unrestricted amounts and the total net position is $189.1 million, $36.7 million is restricted primarily for debt and capital construction purposes and $152.4 million is invested in capital assets net of related debt.  The governmental activities experienced an increase of $1.1 million invested in capital assets, a decrease in restricted net assets of $.1 million, as well as a decrease of $2.3 million in unrestricted net position resulting in a negative net change of $1.3 million.  The business-type activities experienced a $1.6 million increase in investments in capital assets. An increase in restricted net position of $1.4 million as well as a decrease in unrestricted net position of $3.4 million, resulting in a negative change in net position of $0.4 million. Overview of the Financial Statements This Comprehensive Annual Financial Report (CAFR) consists primarily of three required parts - management’s discussion and analysis (this section), the basic financial statements and required supplementary information. The CAFR also includes optional supplementary information that provides summary information and detail, and a statistical section. The basic financial statements are of two kinds that present different views of the City:  The first two statements are government-wide financial statements (pages 39-40) that provide both long-term and short-term information about the City’s overall financial status.  The remaining statements (pages 40-49) are fund financial statements that focus on individual parts of the City government, reporting the City’s operations in more detail than the government-wide statements. - The governmental fund statements (pages 39-44) tell how general government services, like community services, planning, public safety, and public works, were financed in the short term as well as what remains for future spending. 23

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Management’s Discussion & Analysis - Part B - Proprietary fund statements (pages 45-47) offer short and long-term financial information about the activities the government operates like businesses, which for the City of Dover are the Electric Revenue and Water/Wastewater Funds. - The Fiduciary fund statements (pages 48-49) provide information about the financial relationships in which the City acts solely as a trustee or agent for the benefit of others, to whom the resources belong. The City is the trustee, or fiduciary, for its Employee Pension plans and Other Postemployment Benefits plan and acts in an agency capacity for the Dover Downtown Partnership and Fourth of July Celebration Committee, none of which are considered to be component units of the City. All of the City’s Fiduciary activities are reported in separate Statements of Fiduciary Net Position and Changes in Fiduciary Net Position. We exclude these activities from the City’s other financial statements because the City may not use these assets to finance its operations. The City is responsible for insuring that the assets reported in these funds are used for their intended purposes. The financial statements also include notes (pages 51-88) that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information (pages 91-97) that further explains and supports the information in the financial statements. Other supplementary information includes details on non-major funds and other information that can be found on pages 101 through 122. The following page summarizes the major features of the City’s financial statements, including the portion of the City government they cover and the types of information they contain. The remainder of this overview section of management’s discussion and analysis explains the structure and content of each of the statements: 24

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Management’s Discussion & Analysis - Part B Major Features of City’s Government-wide and Fund Financial Statements Government-wide Statements Governmental Funds Proprietary Funds Fiduciary Funds Scope Entire City The activities of the Activities the City Instances in which government City that are not operates similar to the City is the (except fiduciary proprietary or private businesses, trustee or agent for funds) fiduciary, such as such as electric, someone else’s public safety and water and wastewater resources public works funds Required  Statement of  Balance sheet  Statement of net  Statement of financial net position  Statement of position fiduciary net statements  Statement of revenues,  Statement of position activities expenditures, revenues,  Statement of and changes in expenses and changes in fund balances changes in net fiduciary net position position  Statement of cash flows Accounting Accrual Modified accrual Accrual accounting Accrual accounting basis and accounting and accounting and and economic and economic measurement economic current financial resources focus resources focus focus resources focus resources focus Type of All assets and Only assets expected All assets and All assets and asset/liability liabilities, both to be used up and liabilities, both liabilities, both information financial and liabilities that come financial and capital, short-term and capital, and short- due during the year and short-term and long-term term and long-term or soon thereafter; no long-term capital assets included Type of All revenues and Revenues for which All revenues and All revenues and inflow/outflow expenses during cash is received expenses during the expenses during information the year, during or soon after year, regardless of the year, regardless regardless of when the end of the year; when cash is of when cash is cash is received or expenditures when received or paid received or paid paid goods or services have been received and payment is due during the year or soon thereafter 25

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Management’s Discussion & Analysis - Part B Government-wide Statements The government-wide statements report information about the City as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the City of Dover’s assets, liabilities, and deferred inflows/outflows of resources with the difference reported as net position. Net position is one way to measure the City’s financial health or position. Over time, increases or decreases in the City’s net position is an indicator of whether its financial health is improving or deteriorating, respectively. To assess the overall health of the City, one needs to consider additional non-financial factors such as changes in the City’s property tax base and the condition of the City’s physical assets and infrastructure. The government-wide financial statements of the City are divided into two categories:  Governmental activities—Most of the City’s basic services are included here, such as general government, public safety, planning and code enforcement, public works, library and recreation, community and economic development, central services and financial administration. Property taxes, business licenses, permits, sanitation fees, fines, utility transfers and state and federal grants finance most of these activities.  Business-type activities—The City charges fees to customers to help it cover the costs of certain services it provides. The City’s electric, water, and wastewater services are included here. Fund Financial Statements The fund financial statements provide more detailed information about the City’s most significant funds—not the City as a whole. Funds are accounting devices that the City uses to keep track of specific sources of funding and spending for particular purposes. Some funds are required by State law and by covenants. The City Council may also establish other funds to control and manage money for particular purposes. The City has three kinds of funds:  Governmental Funds - Most of the City’s basic services are included in governmental funds, which focus on (1) how cash, and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps one determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. Since this information does not encompass the additional long-term focus of the government-wide statements, we provide additional information on a separate page, which explains the relationship (or differences) between them. - Governmental Fund Balance classifications are reported to the extent to which they are constrained as promulgated by Governmental Accounting Standards Board Statement No. 54. - The City’s general fund is the only governmental fund considered to be a major fund under the requirements of Governmental Accounting Standards Board Statement No. 34.  Proprietary Funds - Services for which the City charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the government-wide statements, provide both long and short-term financial information. - The City’s enterprise funds (one type of proprietary fund) are the same as its business- type activities, but provide more detail and additional information, such as cash flows. 26

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Management’s Discussion & Analysis - Part B - The City’s two enterprise funds are both considered major funds under the requirements of GASB Statement No. 34.  Fiduciary Funds – The City is responsible for assets that because of a trust arrangement can be used only for the trust beneficiaries. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the City’s fiduciary activities are reported in a separate statement of fiduciary net assets and a statement of changes in fiduciary net assets. We exclude these activities from the City’s government-wide financial statements because the City cannot use these assets to finance its operation. Financial Analysis of the City as a Whole The City produces government-wide financial statements using the full accrual basis of accounting and economic resource management focus. As year-to-year financial information is accumulated on a consistent basis, changes in net assets may be observed and used to discuss the changing financial position of the City as a whole. The Net Position, of the City of Dover, as of June 30, 2013 and 2014 are as follows (presented in millions of dollars): Governmental Business-Type Activities Activities Total 2013 2014 2013 2014 2013 2014 Assets Non-Capital Assets $ 14.1 $ 14.1 $ 86.7 $ 87.4 $ 100.8 $ 101.5 Capital Assets 54.1 54.8 135.7 135.0 189.8 189.8 Total Assets 68.2 68.9 222.4 222.4 290.6 291.3 Liabilities Current Liabilities 3.0 3.8 9.8 9.0 12.8 12.8 Non-Current Liabilities 19.7 20.9 38.3 39.5 58.0 60.4 Total Liabilities 22.7 24.7 48.1 48.5 70.8 73.2 Net Position Net investment in Capital Assets 49.6 50.7 100.1 101.7 149.7 152.4 Restricted 0.7 0.6 34.7 36.1 35.4 36.7 Unrestricted (4.8) (7.1) 39.5 36.1 34.7 29.0 Total Net Position $ 45.5 $ 44.2 $ 174.3 $ 173.9 $ 219.8 $ 218.1 The Changes in Net Position, for the City of Dover, as of June 30, 2013 and 2014 are as follows (presented in millions of dollars): 27

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Management’s Discussion & Analysis - Part B Governmental Business-Type Activities Activities Total 2013 2014 2013 2014 2013 2014 Revenues: Program Revenues Charges for Services $ 10.0 $ 10.1 $ - $ - $ 10.0 $ 10.1 Water/Wastewater Charges for Services - - 13.4 13.3 13.4 13.3 Electric Charges for Services - - 90.7 79.5 90.7 79.5 Operating Grants and Contributions 2.9 2.2 - - 2.9 2.2 Capital Grants and Contributions 2.1 1.2 - 0.4 2.1 1.6 General Revenues Property Taxes 11.1 11.1 - - 11.1 11.1 Transfer Taxes 1.1 1.6 - - 1.1 1.6 Earnings on Investments-Other 0.1 0.1 0.1 0.8 0.2 0.9 Total Revenues 27.3 26.3 104.2 94.0 131.5 120.3 Expenses General Government 2.3 2.1 - - 2.3 2.1 Public Safety 18.0 19.2 - - 18.0 19.2 Public Works 6.7 7.2 - - 6.7 7.2 Library and Recreation 2.3 2.9 - - 2.3 2.9 Community and Economic Development 1.1 0.8 - - 1.1 0.8 Central Services 1.2 1.4 - - 1.2 1.4 Financial Administration 3.0 3.6 - - 3.0 3.6 Other Post-Employment Benefits 5.1 3.4 - - 5.1 3.4 Interest Charges 0.1 0.1 - - 0.1 0.1 Plus (less) Indirect Expense Allocation (4.2) (4.6) 4.2 4.6 - - Water/Wastewater - - 9.9 10.2 9.9 10.2 Electric - - 71.4 71.1 71.4 71.1 Total Expenses 35.6 36.1 85.5 85.9 121.1 122.0 Change in Net Position before Transfers (8.3) (9.8) 18.7 8.1 10.4 (1.7) Transfers 10.5 8.5 (10.5) (8.5) - - Change in Net Position 2.2 (1.3) 8.2 (0.4) 10.4 (1.7) Net Position, Beginning of Year 43.3 45.5 166.1 174.3 209.4 219.8 Net Position, End of Year $ 45.5 $ 44.2 $ 174.3 $ 173.9 $ 219.8 $ 218.1 Governmental Activities Governmental net position decreased by $1.3 million. Net revenues of $26.3 million were less than the prior year by $1.0 million. Public Safety Operating Grants experienced a decrease of $0.5 million from the prior year due to less federal highway projects requiring police staffing and the timing of State Grant receipts for Police Pensions. The Community Development Block Grant receipts decreased $0.2 million attributed to program reductions and timing of draws on grant expenditures. Capital Grants decreased $.9 million in State Grant funds as a result of the completion of the new Library. These decreases were mainly offset by increases in building permits, and transfer taxes totaling $0.6 million. Expenses of $36.1 million reflect an overall increase of $0.5 million from the prior year. Public safety cost increased as a result of increased police personnel wages and benefit costs $0.2 million, an increase in the appropriation to the Police Pension Fund of $0.3 million, other increases of $0.2 in insurance premiums and legal fees were offset by decreases in other program expenses. Transfers to the Governmental Funds from the Proprietary Funds decreased $2.0 million, which was related to a one-time transfer in the prior fiscal year towards infrastructure improvements at the Garrison Oak Technical Park. 28

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Management’s Discussion & Analysis - Part B The City changed accounting for the amortization of the unfunded liability for the General Employee Pension Plan in fiscal year 2014. Previously the City reported the employer contributions towards the unfunded liability as a lump sum appropriation to the General Employee Pension Plan and normal cost as a program expense included in personnel benefits. The accounting change resulted in a reduction to the item Appropriation to Pension Fund of $1.0 million, with the offsetting increase in program expenses and an increase in the receipt for indirect expense allocations of $.4 million. (See Budgetary Schedule in Required Supplementary Information for additional details.) The chart that follows allocates revenues to program costs as applicable. It shows that some City functions are in part self-supporting. Expenses & Program Revenues Governmental Activities $25 Revenues $20 Expenses $15 Millions $10 $5 $0 General Public Safety Public Works Library & Community & Central Financial Other Post Government Recreation Economic Services Administration Employment Development Benefits The following chart shows the sources of funding for program costs for the last fiscal year. As can be seen, a substantial portion of funding for governmental operations is provided by property taxes, charges for services and transfers from the utilities. 29

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Management’s Discussion & Analysis - Part B Revenues by Source ‐ Governmental Activities Utility Transfer In 25% Charges for Services 29% Transfer Taxes 5% Operating Grants and Contributions 6% Capital Grants and Property Taxes Contributions 32% 3% Business-Type Activities As noted earlier, the business-type activities saw a negative change in net position of $0.4 million. Both the water/wastewater and electric utilities experienced a decrease in revenues which resulted in a combined net decrease of $10.2 million. The utilities expenses when combined also increased in total by $0.4 million. As with the Governmental activities, the change in the accounting for the amortization of the unfunded liability for the General Employee Pension Plan in fiscal year 2014 had an impact on the program variances from the prior fiscal year. Previously the City reported the employer contributions for the unfunded liability as a lump sum contribution and normal cost as a program expense related to personnel benefits. This accounting change resulted in a reduction to the item Pension Unfunded Liability $0.3 million for the water/wastewater utility and $1.3 million for the electric utility with offsetting increases in program expenses and an increase in the indirect expense allocations of $0.4 million. The water/wastewater utility had a positive change in net position of $2.0 million. The utility experienced a decrease in operating income of $0.1 million from the previous year. The decrease in operating income was primarily due to a decrease in water, sewer and impact fees. An increase in capital grants and contributions of $0.4 million was related to the dedication of infrastructure in new developments. The utility experienced an increase in expenses of $0.3 million attributed to debt service of $0.2 million and Kent County Treatment Fees of $0.1 million. Earnings on investments increased $0.1 million. The electric utility realized a negative change in net position of $2.3 million. The revenues decreased $11.2 million attributed to lower rates coupled with a decrease in consumption. City Council approved decreased electric rates in fiscal year 2013 and fiscal year 2014 as a result of lower power supply cost and to encourage economic development among the business sector. The City’s five year forecast projected using the rate stabilization reserve to offset the reduction in electric rates over the forecast periods, with another rate analysis to be performed in Fiscal Year 2016. At the beginning of fiscal year 2014, the City had a rate stabilization reserve balance of $17.4 million in planning for the rate reductions. 30

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Management’s Discussion & Analysis - Part B The electric utility experienced a significant increase over budget in power supply and generation cost ($6.7 million) due to the extreme winter weather and its impact on the availability of fuel to run the power plant along with the effects on pricing in PJM ISO region. As a result an additional $3.0 million over the budgeted $4.0 million was transferred from the rate stabilization reserve to cover the unplanned increase in power supply cost. Earnings on investments increased $0.6 million due to higher reserve levels. The City maintains a competitive rate among all other public and private power companies in the State. Operating expenses decreased as well in total by $0.3 million. An increase of $0.8 million for OPEB contributions was partially offset by a $1.1 million decrease to personnel cost attributed to retirements and vacant positions. Interest and fiscal charges have decreased by $0.3 million. Revenues & Expenses Business Type Activities $90.0 $80.0 $70.0 Operating Revenues & Transfers $60.0 Millions $50.0 $40.0 79.5 81.3 Operating Expenses & $30.0 Transfers $20.0 $10.0 13.3 11.6 $‐ Electric Revenue Water/Wastewater Fund Fund 31

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Management’s Discussion & Analysis - Part B Financial Analysis of the City’s Funds Governmental Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Government funds focus on expendable resources and near term inflows and outflows of those resources. As such, fund balance is generally a good indicator of net resources available for spending at the end of the fiscal year, subject to any stated restrictions on its use. The combined fund balances of the City’s governmental funds as of June 30, 2014, were $8.1 million. This represented a decrease of $.8 million during the year. Approximately 42% of the combined fund balances, $3.4 million, constitutes unassigned fund balance, which is available to meet the City’s current and future needs. The remainder of fund balance is non-spendable, restricted, committed or assigned to indicate that it is not available for operational spending because it is constrained by legally enforceable contracts, other governmental agreements and legislation, City Council resolution or it is not convertible to cash within a reasonable period of time. Further detail of fund balances is presented in the Notes to the Basic Financial Statements in Note 7. The General Fund is the primary operating fund of the City, accounting for such activities as general government, public safety, public works, library, recreation, planning, community and economic development, central services and financial administration. The General Fund balance as of June 30, 2014, was $7.7 million, which represents a decrease of $0.5 million from the previous fiscal year. Both revenue ($2.0 million) and expenditures decreased ($3.8 million) due to completion of the new Library. The decrease in revenue was offset slightly by increases in revenues from Court of Chancery fees and building permits. The street program experienced an increase of $1.3 million related to capital improvements and the sanitation programs had an increase of $0.3 for replacement vehicles. Debt service increased $0.2 million as a result of the 2013 bond issuance. Personnel increases attributed to collective bargaining agreements and other non-union employees resulted in a net increase in program expenses of $0.2 million. Public Works and general governmental services experienced a high rate of retirements and turnover reducing the impact of the above pay and benefit increases related to collective bargaining agreements. Proprietary Funds The City’s proprietary funds provide the same type of information found in the government- wide Financial Statements, but in more detail. As of June 30, 2014, the Water/Wastewater Fund has a net position of $52.3 million, of which $11.1 million is unrestricted. The fund’s net position increased $2.0 million during the year as explained on page 29. As of June 30, 2014, the Electric Revenue Fund has a net position of $121.6 million, of which $25.0 million is unrestricted. This fund experienced a decrease in net position of $2.3 million during the year as explained on page 31. General Fund Budgetary Highlights During this fiscal year, the City Council amended the budget three times. These budget amendments or supplemental appropriation ordinances were primarily for the following purposes: 1. To amend the grant budgets, reserve accounts for the actual results of the prior fiscal year and to re-appropriate budget balances for ongoing capital projects. 32

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Management’s Discussion & Analysis - Part B 2. To amend all carried forward budget balances for the major operating funds from the prior fiscal year, as well as program revenues and expenses based on the analyses provided by a mid-year review. 3. To amend significant changes in program revenues, expenses and ending fund balances based on actual amounts. The General Fund financials in the Governmental Funds Balance Sheet (page 41) and Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds (page 43) include both the General Fund operating activities and the Governmental Capital Project Fund activities. The General Fund – Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget & Actual is included in Part D – Required Supplementary Information (page 91-92). The Governmental Capital Projects Fund – Schedule of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual is included in Part E – Supplementary Information (Page 104). The Combining Statements – Combining General Fund Balance Sheet and Combining Statement of Revenues, Expenditures and Changes in Fund Balances of the General Fund is included in Part E – Supplementary Information (page 103). The Final General Fund Budget incorporated the following changes to the Original Budget. The Budget Balance carried forward from the prior fiscal year was higher by $0.8 million than was projected. Receipts had a net increase of approximately $0.8 million. The most significant increases were attributed to intrafund service receipts related to the accounting change for pensions, transfer taxes, Court of Chancery fees, and building permits. The most significant reductions of revenue were Police extra duty fees and civil traffic penalties. Expenditures were revised to reflect an aggregate increase of $1.1 million. Increased employer contributions to the Police and Employee Pension funds accounted for most of the increased budget expense with a slight increase in transfers to the capital project fund. The increases were offset by decreases in street lights, insurance and police pension grants, and fire services. The net result of these changes was a $0.5 million increase in the revised budget balance over the Original Budget Balance (on a non-GAAP basis). Actual revenues and other financing sources matched the final budgeted amounts in the General Fund for the current fiscal year. The more significant positive variances were in permits and other licenses, police revenues, and Court of Chancery fees and Transfer Taxes. These revenue increases were completely offset with lower revenues for police extra duty fees, library grants, intrafund service fees, and other public safety grants. Expenditures were approximately $0.9 million under budget as a result of several operating departments experiencing personnel savings through attrition. An increase in legal fees for collective bargaining negotiations was absorbed with the favorable personnel results. The General Fund budget balance carry forward was $0.9 million higher than budgeted as a result of the above variances. Capital Asset and Debt Administration At the end of the current fiscal year, the City’s governmental and proprietary funds had invested $54.8 million and $135.0 million, respectively, in a variety of capital assets and infrastructure, as reflected in the following schedule, which represents a net increase of $0.7 million for governmental activities and the proprietary funds decreased by $0.7 million. The decrease in the proprietary funds was attributed to increased depreciation rates for capital improvements on electric generating Units 1 & 2 (presented in millions of dollars). Additional detailed data for all capital assets of the City is presented in the Notes to the Basic Financial Statements in Note 4. 33

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Management’s Discussion & Analysis - Part B Governmental Business-Type Activities Activities Total 2013 2014 2013 2014 2013 2014 Depreciable Assets, Net Buildings $ 26.3 $ 25.7 $ - $ - $ 26.3 $ 25.7 Equipment 2.2 2.3 - - 2.2 2.3 Vehicles 1.1 1.3 - - 1.1 1.3 General Infrastructure 19.6 19.6 - - 19.6 19.6 Utility, Plant, Buildings, and Infrastructure - - 131.7 129.0 131.7 129.0 Other 0.8 0.7 - - 0.8 0.7 Non-depreciable Assets Land 4.0 4.0 1.6 1.6 5.6 5.6 Construction in Progress 0.1 1.2 2.4 4.4 2.5 5.6 $ 54.1 $ 54.8 $ 135.7 $ 135.0 $ 189.8 $ 189.8 A summary of debt outstanding at June 30, 2013 and 2014 is as follows which represents an increase of $1.2 million for the governmental funds and a decrease of $1.3 million for the proprietary funds, since the end of last year (presented in millions of dollars): Governmental Business-Type Activities Activities Total 2013 2014 2013 2014 2013 2014 Non-current liabilities Liability for Compensated Absences $ 2.1 $ 2.2 $ 0.8 $ 0.7 $ 2.9 $ 2.9 Bonds (Net of Discount/Issuance Cost) 4.5 4.0 37.0 38.4 41.5 42.4 OPEB Obligation 13.1 14.7 0.5 0.5 13.6 15.2 $ 19.7 $ 20.9 $ 38.3 $ 39.6 $ 58.0 $ 60.5 Additional detailed data for all debt of the City is presented in the Notes to the Basic Financial Statements in Note 5. The City Charter limits the amount of general obligation debt the City can issue in any one year to .25% of the taxable assessed value of real property within the City. The aggregate of amounts borrowed for which the full faith and credit of the City is pledged cannot exceed 5% of assessed value of real property within the City boundaries. The City has used 2.6% of its debt limit. Economic Factors and Next Year’s Budgets and Rates In Fiscal 2014 the City continued to see an uptick in residential housing and commercial development. The City developed the fiscal year 2015 budget in accordance with the City’s financial policies ensuring all budgets are balanced and reserve requirements were adhered to. The following changes over fiscal year 2014 were incorporated into the fiscal year 2015 budget.  All vacant positions from 2014 were reviewed. The City maintained the current previous headcount, along with one addition of an Assistant City Manager position resulting in an overall personnel budget increase of $16,000. The low personnel budget increase was a result of filling vacant positions at entry level wages as compared to the prior employee and no increase in health insurance premiums.  Increases in wages based on collective bargaining agreements. For those collective bargaining 34

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Management’s Discussion & Analysis - Part B agreements that were being negotiation, no increases were included  A 3% raise was included for non-bargaining employees  Benefit rate changes were included for pension, OPEB and worker’s compensation  No discretionary increases in operating expenses  Funded the capital investment plan with a commitment to providing dollars for necessary infrastructure an utility improvements The General Fund revenues are projected to increase by 7.1% and expenditures increasing by 5.5%. The net increase was made up of an increase in the Electric Fund transfer of $2.0 million, building permit increases of $0.2 million and intrafund service fees of $0.4 million. All current rates and fees will be maintained in fiscal year 2015. The capital investment plan for fiscal year 2015 will be financed with $2.2 million of operating funds, debt proceeds of $3.6 million and $0.2 million from capital grants. The Water/Wastewater Fund overall revenues increased 5.1% and expenses increased 3.0%. The revenue increase is related to an increase in the groundwater inflow adjustment rate ($0.5 million) to help finance the cost of capital improvements for sewer mains and increased impact fees ($0.2 million) due to a pickup in construction activity. Also, increased was the customer service charge of $2.50 per customer bill to $5.00. The expense increase of $0.4 million is a result of the capital project financing for sewer as mentioned above. All other water rates and wastewater rates will remain the same as the prior fiscal year. The City continues to maintain competitive water and wastewater rates within the State of Delaware. The capital investment plan for fiscal year 2015 will be financed with $3.0 million of operating income and $1.3 million from impact fee reserves. The Electric Fund overall revenues decreased 0.8% and expenses increased by 1.4%. The Electric Fund will also be utilizing a $2.0 million transfer from the rate stabilization reserve in order to maintain operating cash requirements. The City anticipates a negative 1.2% growth rate attributed to demand response programs being implemented by large customers and conservation measures on the part of other commercial and residential customers. The expense increase of $1.1 million is related to the General Fund transfer increase of $2.0 million. Capital projects are budgeted to be financed with a $4.8 million transfer from operating income, a $0.7 million decrease over prior year. The City continues to closely monitor the local economy and its impact on growth and revenues. Revenue enhancements, rate increases, and potential cost reductions will continue to be reviewed in order to maintain the City’s financial policies. Contacting the City’s Financial Management This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact Ms. Donna Mitchell, Controller/Treasurer at 302-736-7018 (TTY/TDD Operator 1- 800-855-1155). 35

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FINANCIAL SECTION PART C BASIC FINANCIAL STATEMENTS - Government-Wide Financial Statements - Fund Financial Statements - Notes to Financial Statements

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2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Basic Financial Statements – Part C City of Dover Statement of Net Position June 30, 2014 Governmental Business-Type Activities Activities Total Assets: Cash and Cash Equivalents $ 3,248,194 $ 7,063,821 $ 10,312,015 Investments 6,677,265 19,155,594 25,832,859 Receivables, Net 2,210,150 7,134,744 9,344,894 Internal Balances 733,520 (733,520) - Due from Other Governments 78,580 - 78,580 Inventory, at Cost 143,291 3,932,385 4,075,676 Prepaid Items 59,196 24,578 83,774 Restricted Cash and Cash Equivalents 640,076 13,028,076 13,668,152 Restricted Investments 18,292 28,097,977 28,116,269 Net Pension Asset 337,290 7,601,396 7,938,686 Net OPEB Asset - 2,068,684 2,068,684 Land and Construction in Progress 5,134,530 5,979,462 11,113,992 Capital Assets, Net of Depreciation 49,653,711 129,041,536 178,695,247 Total Assets 68,934,095 222,394,733 291,328,828 Liabilities: Accounts Payable and Accrued Liabilities 2,729,487 5,954,398 8,683,885 Unearned Revenue 914,756 273,266 1,188,022 Customer Deposits - 2,036,328 2,036,328 Other 169,933 694,490 864,423 Non-Current Liabilities Due within One Year 1,405,352 3,271,423 4,676,775 Due in more than One Year 4,838,367 35,785,545 40,623,912 Due in more than One Year - OPEB 14,668,233 485,581 15,153,814 Total Liabilities 24,726,128 48,501,031 73,227,159 Net Position: Net investment in capital assets 50,738,483 101,670,949 152,409,432 Restricted for: Capital Projects 143,532 36,123,755 36,267,287 Public Safety 247,628 - 247,628 Other Purposes 220,894 - 220,894 Unrestricted (7,142,570) 36,098,998 28,956,428 Total Net Position $ 44,207,967 $ 173,893,702 $ 218,101,669 The notes to financial statements are an integral part of this statement. 39

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Basic Financial Statements – Part C City of Dover Statement of Activities For the Year Ended June 30, 2014 Net (Expense) Revenue and Changes in Net Program Revenues Position Indirect Operating Capital Grants Expenses Charges for Grants and and Governmental Business Type Expenses Allocation Services Contributions Contributions Activities Activities Total Functions/Programs Governmental Activities General Government $ 2,098,353 $ (809,376) $ 2,137,574 $ - $ - $ 848,597 $ - $ 848,597 Public Safety 19,219,986 - 4,676,162 731,767 - (13,812,057) - (13,812,057) Public Works 7,171,799 (576,970) 2,595,648 663,940 976,284 (2,358,957) - (2,358,957) Library and Recreation 2,942,800 - 699,622 272,418 250,275 (1,720,485) - (1,720,485) Community and Economic Development 841,248 (164,694) - 490,491 - (186,063) - (186,063) Central Services 1,398,225 (885,639) - - - (512,586) - (512,586) Financial Administration 3,577,529 (2,209,481) - 1,000 - (1,367,048) - (1,367,048) Other Post Employment Benefits 3,348,267 - - - - (3,348,267) - (3,348,267) Interest Charges 122,812 - - - - (122,812) - (122,812) Total Governmental Activities 40,721,019 (4,646,160) 10,109,006 2,159,616 1,226,559 (22,579,678) - (22,579,678) Business Type Activities - Water/Wastewater 10,179,140 1,218,852 13,268,213 - 401,947 - 2,272,168 2,272,168 Electric 71,053,740 3,427,308 79,489,192 - - - 5,008,144 5,008,144 Total Business Type Activities 81,232,880 4,646,160 92,757,405 - 401,947 Total Primary Government $ 121,953,899 $ - $ 102,866,411 $ 2,159,616 $ 1,628,506 $ (22,579,678) $ 7,280,312 $ (15,299,366) General Revenues Taxes Property Taxes 11,094,479 - 11,094,479 Transfer Taxes 1,543,626 - 1,543,626 Earnings on Investments 142,390 832,919 975,309 Total General Revenues 12,780,495 832,919 13,613,414 Transfers 8,500,000 (8,500,000) - Total General Revenues and Transfers 21,280,495 (7,667,081) 13,613,414 Changes in Net Position (1,299,183) (386,769) (1,685,952) Net Position Beginning 45,507,150 174,280,471 219,787,621 Net Position Ending $ 44,207,967 $ 173,893,702 $ 218,101,669 The notes to financial statements are an integral part of this statement. 40

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Basic Financial Statements – Part C City of Dover Governmental Fund Balance Sheet June 30, 2014 Total Total General Nonmajor Governmental Fund Funds Funds Assets: Cash and Cash Equivalents $ 3,013,820 $ - $ 3,013,820 Restricted Cash and Cash Equivalents - 640,076 640,076 Investments 5,305,349 - 5,305,349 Restricted Investments 18,292 - 18,292 Receivables, net Accounts 2,007,898 5,780 2,013,678 Taxes 177,638 - 177,638 Due from Other Funds 869,766 - 869,766 Due from Other Governments - 78,580 78,580 Prepaid Items 42,999 2,447 45,446 Inventory, at Cost 143,291 - 143,291 Total Assets $ 11,579,053 $ 726,883 $ 12,305,936 Liabilities: Accounts Payable $ 2,127,495 $ 86,365 $ 2,213,860 Unearned Revenue 914,756 - 914,756 Due to Other Funds 18,764 117,482 136,246 Other 169,933 - 169,933 Total Liabilities 3,230,948 203,847 3,434,795 Deferred Inflows of Resources: Unavailable revenue 688,935 38,011 726,946 Total Deferred Inflows of Resources 688,935 38,011 726,946 Fund Balances: Non-Spendable 207,884 2,447 210,331 Restricted 129,476 482,578 612,054 Committed 723,300 - 723,300 Assigned 3,163,431 - 3,163,431 Unassigned 3,435,079 - 3,435,079 Total Fund Balances 7,659,170 485,025 8,144,195 Total Liabilities, Deferred Inflows and Fund Balances $ 11,579,053 $ 726,883 $ 12,305,936 The notes to financial statements are an integral part of this statement. 41

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Basic Financial Statements – Part C City of Dover Reconciliation of the Balance Sheet of Governmental Funds To the Statement of Net Position June 30, 2014 Amounts reported for governmental activities in the statement of net position (page 39) are different because: Total fund balances for governmental funds (Page 41) $ 8,144,195 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 54,788,241 Other assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds. 726,946 The net pension asset resulting from contributions in excess of the annual required contribution (police and employee) is not a current financial resource, and, therefore, is not reported in the governmental funds. Police Pension Plan 180,318 General Pension Plan 156,972 337,290 An internal service fund (page 43) is used by the City to charge the cost of the workers' compensation fund. The assets and liabilities of the internal service fund are included in governmental activities in the statement of net position. 1,123,247 Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and, accordingly, are not reported as fund liabilities. Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. All liabilities--both current and long-term-- are reported in the statement of net position. Compensated absences represent amounts accrued for sick leave for those employees who are vested and accrued vacation for all employees. The net OPEB obligation resulting from contributions less than the annual required contribution (general) is not a use of current financial resources, and therefore, is not reported in the governmental funds. Current- General Obligation Bonds (358,650) Compensated Absences (1,046,702) (1,405,352) Long-Term- General Obligation Bonds, net of discount (3,691,108) Compensated Absences (1,147,259) Net OPEB Obligation (14,668,233) (19,506,600) (20,911,952) Total net position of governmental activities (Page 39 ) $ 44,207,967 The notes to financial statements are an integral part of this statement. 42

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Basic Financial Statements – Part C City of Dover Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds For the Year Ended June 30, 2014 Total Total General Nonmajor Governmental Fund Funds Funds Revenues Fines $ 653,625 $ 357,531 $ 1,011,156 Library Revenue- General 68,190 - 68,190 Library Revenue County Reimbursement 430,363 - 430,363 Licenses and Permits 2,952,015 - 2,952,015 Sanitation Fees and Rebates 2,595,648 - 2,595,648 Recreation - 49,144 49,144 Miscellaneous Services 1,831,683 - 1,831,683 Property Taxes 11,111,409 - 11,111,409 Transfer Taxes - 1,543,626 1,543,626 Grants Received 722,736 2,693,583 3,416,319 Court of Chancery Fees 1,034,460 - 1,034,460 Investment Income 120,295 2,195 122,490 Total Revenues 21,520,424 4,646,079 26,166,503 Expenditures Current: General Government 1,271,523 - 1,271,523 Library Services 1,434,616 263,366 1,697,982 Public Safety and Law Enforcement 18,946,771 184,061 19,130,832 Public Works 1,568,948 1,004,017 2,572,965 Recreational Services 683,363 - 683,363 Streets and Sanitation Services 4,634,091 - 4,634,091 Financial Administration 1,002,539 - 1,002,539 Garage and Stores 415,593 - 415,593 Insurance 272,895 - 272,895 Retiree Health Care 1,636,500 - 1,636,500 Employee Pension 121,000 - 121,000 Community and Economic Development 211,595 464,959 676,554 Street Lights 774,533 - 774,533 Debt Service: Principal Retirement 429,239 - 429,239 Interest and Fiscal Charges 122,812 - 122,812 Total Expenditures 33,526,018 1,916,403 35,442,421 Excess (deficiency) of Revenues over Expenditures (12,005,594) 2,729,676 (9,275,918) Other financing Sources (Uses) Transfers in 11,458,445 - 11,458,445 Transfers out - (2,958,445) (2,958,445) Total other Financing Sources (Uses) 11,458,445 (2,958,445) 8,500,000 Net Change in Fund Balances (547,149) (228,769) (775,918) Fund Balances at Beginning of Year 8,206,319 713,794 8,920,113 Fund Balances at End of Year $ 7,659,170 $ 485,025 $ 8,144,195 The notes to financial statements are an integral part of this statement. 43

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Basic Financial Statements – Part C City of Dover Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2014 Amounts reported for governmental activities in the statement of activities (page 40) are different because: Net change in fund balances--total governmental funds (Page 43) $ (775,918) Governmental fund reports capital outlays as expenditures. However, in the statement of activities the cost of these assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Capitalization of net capital asset expenditures including CIP 3,777,578 Loss on assets transferred in and not fully depreciated (83,369) Current Year depreciation and amortization (2,961,986) 732,223 Governmental funds report the repayment of principal of general long-term debt as an expenditure but the repayment reduces the liability in the statement of net position. 429,239 Changes in other assets are not available to pay for current period expenditures and therefore are not reported as revenues in the funds. 89,273 Under the modified accrual basis of accounting used in the governmental funds, expenditures are not recognized for the transactions that are not normally paid with expendable available financial resources. In the statement of activities, however, which is presented on the accrual basis, expenses and liabilities are reported regardless of when financial resources are available. In addition, assets are not recognized in governmental funds unless they represent current financial resources but are recognized in the statement of activities as they accrue. The following differences, therefore, occur between the statement of activities and the governmental funds. Increase in compensated absences (112,891) Increase in net pension asset - Police Plan 74,253 Decrease in net pension asset - General Pension Plan (34,848) Increase in net OPEB obligation - General Fund (1,555,919) (1,629,405) An internal service fund is used by the City to charge the costs of workers' compensation insurance to individual funds. The change in net position of the internal service fund is transferred to the governmental funds and amounts attributable to internal charges are then allocated to functional expenditures. Net revenue is allocated back to respective functions and business type activities, as appropriate. (144,595) Change in net position of governmental activities (Page 40) $ (1,299,183) The notes to financial statements are an integral part of this statement. 44

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Basic Financial Statements – Part C City of Dover Statement of Net Position - Proprietary Funds June 30, 2014 Governmental Business-type Activities Activities Water/ Electric Total Wastewater Revenue Enterprise Internal Fund Fund Funds Service Fund Assets Current Assets: Cash and Cash Equivalents $ 3,573,198 $ 3,490,623 $ 7,063,821 $ 234,374 Investments 7,852,645 11,302,949 19,155,594 1,371,916 Receivables, Net 979,138 6,155,606 7,134,744 18,834 Due from Other Funds-Charges 17,540 37,852 55,392 - Inventory 62,751 3,869,634 3,932,385 - Prepaid Items 100 24,478 24,578 13,750 Total Current Assets 12,485,372 24,881,142 37,366,514 1,638,874 Non-Current Assets: Restricted Assets Cash 4,952,156 8,075,920 13,028,076 - Investments 3,005,802 25,092,175 28,097,977 - Net Pension Asset 604,886 6,996,510 7,601,396 - Net OPEB Asset - 2,068,684 2,068,684 - Land and Construction in Progress 2,830,934 3,148,528 5,979,462 - Capital Assets, Net of Depreciation 44,877,818 84,163,718 129,041,536 - Total Non-Current Assets 56,271,596 129,545,535 185,817,131 - Total Assets 68,756,968 154,426,677 223,183,645 1,638,874 Liabilities Current Liabilities: Accounts Payable and Accrued Expenses 984,041 4,970,357 5,954,398 515,627 Due to Other Funds - Charges 238,942 549,970 788,912 - Deferred Revenue - 273,266 273,266 - Accrued Interest Payable 128,563 565,927 694,490 - Customer Deposits - 2,036,328 2,036,328 - Revenue Bonds Payable 761,560 2,260,000 3,021,560 - Liability for Compensated Absences 75,698 174,165 249,863 - Total Current Liabilities 2,188,804 10,830,013 13,018,817 515,627 Non-Current Liabilities: Net OPEB Obligation 485,581 - 485,581 - Revenue Bonds Payable 13,650,787 21,680,000 35,330,787 - Liability for Compensated Absences 93,009 361,749 454,758 - Total Non-Current Liabilities 14,229,377 22,041,749 36,271,126 - Total Liabilities 16,418,181 32,871,762 49,289,943 515,627 Net Position Net investment in capital assets 38,298,703 63,372,246 101,670,949 - Restricted for Capital Construction 2,955,660 33,168,095 36,123,755 - Unrestricted 11,084,424 25,014,574 36,098,998 1,123,247 Total Net Position $ 52,338,787 $ 121,554,915 $ 173,893,702 $ 1,123,247 The notes to financial statements are an integral part of this statement. 45

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Basic Financial Statements – Part C City of Dover Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds For the Year Ended June 30, 2014 Governmental Business-type Activities Activities Water/ Electric Total Wastewater Revenue Enterprise Internal Fund Fund Funds Service Fund Operating Revenues Charges for Services $ 10,952,541 $ 78,187,252 $ 89,139,793 $ - Miscellaneous Services/Income 2,311,329 1,287,501 3,598,830 502,977 Total Operating Revenues 13,263,870 79,474,753 92,738,623 502,977 Operating Expenses Water/Wastewater Services 7,868,499 - 7,868,499 - General Administrative 1,221,341 2,450,884 3,672,225 524,211 Power Supply - 57,233,726 57,233,726 - Transmission/Distribution - 3,806,078 3,806,078 - Engineering - 1,331,909 1,331,909 - Metering - 284,229 284,229 - Systems Operations - 739,406 739,406 - Utility Tax - 1,258,957 1,258,957 - Depreciation 1,755,925 4,748,120 6,504,045 - Contractual Services - - - 20,000 Taxes - - - 33,774 Retirees Health Care 236,565 1,489,000 1,725,565 - Self Insurance-Workers' Compensation - - - 89,487 Total Operating Expenses 11,082,330 73,342,309 84,424,639 667,472 Operating Income/Loss 2,181,540 6,132,444 8,313,984 (164,495) Non-Operating Revenues (Expenses) Interest Earned: Operating Funds 43,383 2,112 45,495 - Reserve Funds 31,730 216,010 247,740 7,782 Net Decrease in Fair Value of Investments 113,285 426,399 539,684 12,118 Interest and Fiscal Charges (315,662) (1,138,739) (1,454,401) - Gain on Sale of Assets 4,343 14,439 18,782 - Total Non-Operating Revenue (expenses) (122,921) (479,779) (602,700) 19,900 Income/Loss before Contributions and Transfers 2,058,619 5,652,665 7,711,284 (144,595) Contractor Contributions - Infrastructure 401,947 - 401,947 - Transfers Out (500,000) (8,000,000) (8,500,000) - Total transfers (500,000) (8,000,000) (8,500,000) - Change in Net Position 1,960,566 (2,347,335) (386,769) (144,595) Total Net Position--Beginning 50,378,221 123,902,250 174,280,471 1,267,842 Total Net Position--Ending $ 52,338,787 $ 121,554,915 $ 173,893,702 $ 1,123,247 The notes to financial statements are an integral part of this statement. 46

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Basic Financial Statements – Part C City of Dover Statement of Cash Flows - Proprietary Funds For the Year Ended June 30, 2014 Governmental Business-type Activities Activities Water Electric Total Wastewater Revenue Enterprise Internal Fund Fund Funds Service Fund Cash Flows from Operating Activities Receipts from Customers $ 13,236,609 $ 80,942,401 $ 94,179,010 $ - Payments to Suppliers (including Purchased Power) (6,452,188) (61,578,670) (68,030,858) (163,761) Payments to Employees (1,762,010) (4,123,087) (5,885,097) - Payments of Personnel Related Costs (1,195,624) (3,198,244) (4,393,868) 502,143 Internal Activity--Payments from (to) Other Funds 122,090 - 122,090 - Other Receipts (Payments) including Claims Paid (88,804) (2,032,780) (2,121,584) (486,730) Net Cash Provided by (used for) Operating Activities 3,860,073 10,009,620 13,869,693 (148,348) Cash Flows from Noncapital Financing Activities Transfers Out (500,000) (8,000,000) (8,500,000) - Net Cash Used for Noncapital Financing Activities (500,000) (8,000,000) (8,500,000) - Cash Flows from Capital and Related Financing Activities Acquisition and Construction of Capital Assets (2,159,900) (3,102,397) (5,262,297) - Proceeds from Capital Debt 6,304,518 - 6,304,518 - Bond Issuance Costs (144,726) - (144,726) - Principal Paid on Revenue Bond Maturities (2,701,370) (2,170,000) (4,871,370) - Interest Paid on Capital Debt (397,471) (1,138,739) (1,536,210) - Net Cash Provided by (used for) Capital and Related Financing Activities 901,051 (6,411,136) (5,510,085) - Cash Flows from Investing Activities Interest on Investments 43,383 2,112 45,495 - Redemption of Investment Securities 1,125,000 7,000,000 8,125,000 (20,469) Purchase of Investment Securities (121,487) (954,572) (1,076,059) 20,077 Interest on Restricted Cash 31,730 216,010 247,740 - Net Cash Provided by (used for) Investing Activities 1,078,626 6,263,550 7,342,176 (392) Net Increase/(Decrease) in Cash and Cash Equivalents 5,339,750 1,862,034 7,201,784 (148,740) Balances--Beginning of the Year 3,185,604 9,704,509 12,890,113 383,114 Balances--End of the Year $ 8,525,354 $ 11,566,543 $ 20,091,897 $ 234,374 Reconciliation of Operating Income to Net Cash Provided by (Used for) Operating Activities: Operating Income $ 2,181,540 $ 6,132,444 $ 8,313,984 $ (164,495) Adjustments to Reconcile Operating Income to Net Cash provided by (Used for) Operating Activities: Depreciation Expense 1,755,925 4,748,120 6,504,045 - Changes in Assets and Liabilities (Increase)/Decrease in Receivables (60,710) 1,319,487 1,258,777 (14,834) (Increase)/Decrease in Due from Other Funds 33,449 93,153 126,602 - (Increase)/Decrease in Inventory 18,520 (27,416) (8,896) - (Increase)/Decrease in Prepaid Items (100) 26,801 26,701 (2,500) Increase/(Decrease) in Accounts Payable and Accrued Expenses (125,349) (899,415) (1,024,764) 33,481 Increase/(Decrease) in Deferred Revenue (98,909) (870,536) (969,445) - Increase/(Decrease) in Due to Other Funds - 40,839 40,839 - Increase/(Decrease) in Customer Deposits 122,090 277,318 399,408 - Increase/(Decrease) in Liability for Compensated Absences - 14,169 14,169 - Increase/(Decrease) in NPO/NPA for Pension (2,948) (91,802) (94,750) - Increase/(Decrease) in NPO/NPA for OPEB 36,565 (753,542) (716,977) - Net Cash Provided by Operating Activities $ 3,860,073 $ 10,009,620 $ 13,869,693 $ (148,348) Non-Cash Investing, Capital and Financing Activities: Change in Fair Value of Investments $ 113,285 $ 426,399 $ 539,684 $ (20,864) The notes to financial statements are an integral part of this statement. 47

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Basic Financial Statements – Part C City of Dover Statement of Net Position Fiduciary Funds June 30, 2014 Pension OPEB Trust Trust Agency Funds Fund Funds Assets Cash and Cash Equivalents $ 2,149,308 $ 792,984 $ 499,406 Investments at Fair Value - Mutual Funds 44,538,782 17,965,795 - Receivables 20,200 - 53,530 Total Assets 46,708,290 18,758,779 552,936 Liabilities Accounts Payable 3,334 6,583 76,079 Due to Agencies - - 476,857 Total Liabilities 3,334 6,583 $ 552,936 Net Position Net Position Held in Trust for Retirement Benefits $ 46,704,956 $ 18,752,196 The notes to financial statements are an integral part of this statement. 48

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Basic Financial Statements – Part C City of Dover Statement of Changes in Net Position Fiduciary Funds For the Year Ended June 30, 2014 Pension OPEB Trust Trust Funds Fund Additions: Net Investment Income $ 5,717,136 $ 2,169,596 City's Contribution-Payroll Based 278,036 1,715,327 City's Contribution-Lump Sum 3,884,100 3,325,500 Employee Contribution 211,550 - State Insurance Premium Tax Proceeds 471,461 - Other 68,502 45,353 Total Additions 10,630,785 7,255,776 Deductions: Benefit Payments 5,181,969 2,113,303 General Administration 21,543 17,500 Refund of Pension Contribution 20,376 - Total Deductions 5,223,888 2,130,803 Change in Net Position 5,406,897 5,124,973 Net Position - Beginning 41,298,059 13,627,223 Net Position - Ending $ 46,704,956 $ 18,752,196 The notes to financial statements are an integral part of this statement. 49

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2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2014 INDEX 1. FINANCIAL REPORTING ENTITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 A. The City of Dover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 B. Reporting Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 2. SIGNIFICANT ACCOUTING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 A. Basis of Presentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 B. Basis of Accounting and Measurement Focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 C. New Pronouncements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 D. Capital Assets and Long-Term Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 E. Budget Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 F. Major Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 G. Inventories and Prepaid Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 H. Cash and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 I. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 J. Restricted Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 K. Unbilled Service Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 L. Bond Accounts/Issuance Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 M. Deferred Inflows of Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 N. Fund Balances and Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 O. Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 3. DEPOSITS AND INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 A. Cash In Bank and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 B. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 4. CAPITAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 5. LONG-TERM OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 A. Summary of Bonded Indebtedness by Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 B. Status of June 30, 2014 – General Obligations Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 C. Change In Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 D. Debt Service Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 6. RESTRICTED NET POSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 7. FUND BALANCES & NET POSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 8. PROPERTY TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 9. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . 72 A. Due To/From Other Funds – Charges and Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 B. Interfund Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 51

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements INDEX - CONTINUED 10. RENTAL INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 11. MATERIAL COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 12. FORWARD CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 13. SUBSEQUENT EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 14. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 A. Health Insurance – State of Delaware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 B. Workers’ Compensation Fund – Self-Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 C. Other Than Health or Workers’ Compensation Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 15. COMPENSATED ABSENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 16. OTHER POST EMPLOYMENT BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 17. DEFERRED COMPENSATION PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 18. RETIREMENT PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 A. Defined Contribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 B. Defined Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 52

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2014 1. FINANCIAL REPORTING ENTITY A. The City The City of Dover was incorporated in 1829 and is a municipal corporation governed by an elected mayor and a nine-member council. The accompanying financial statements present the financial position and operating results for fiscal year ended June 30, 2014. B. Reporting Entity In evaluating how to define the reporting entity, for financial reporting purposes, management has considered all potential component units. The decision to include a potential component unit was made by applying the criteria set forth in Accounting Principles Generally Accepted in the United States of America (GAAP). The criterion used is that set forth by Statement of Governmental Accounting Standards (GASB) number 14 and as updated by GASB 61 which defines the reporting entity as the primary government and those component units for which the primary government is financially accountable. Financial accountability is defined as appointment of a voting majority of the component unit's board and either (a) the ability to impose will by the primary government, or (b) the possibility that the component unit will provide a financial benefit to or impose a financial burden on the primary government. Based upon this criterion, the following is a brief review of each potential component unit addressed in defining the government’s reporting entity. Included within the reporting entity: The City provides many services as follows - police protection, street maintenance, sanitation, recreation, library, community development, public improvements, planning, safety inspections, electric generation and distribution, water and wastewater services, legislative services and general administration, including employee benefits. These functions are part of the City’s daily operations and therefore are not legally separate component units. Not included within the reporting entity: The City has joined the State of Delaware Police Pension Plan for uniformed police officers employed by the City after September 1, 1982. The plan is completely managed by the State of Delaware and, therefore, is not included in the financial statements. The Robbins Hose Volunteer Fire Company and the Capital School District are not included within the financial reporting entity because they do not meet the criteria for inclusion set forth by GAAP. 2. SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the City conform to generally accepted accounting principles as applicable to governments. A summary of the more significant policies follows: A. Basis of Presentation Government-wide Statements: The statement of net position and the statement of activities include the financial activities of the overall government, except for fiduciary activities. Individual funds are not displayed but the statements distinguish governmental activities, generally funded by taxes and 53

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements other City revenue, from business-type activities (BTAs), generally funded in whole or in part with fees charged to external users. Eliminations have been made for the doubling-up effect of certain internal activities. The government-wide statement of activities presents a comparison between direct program expenses and program revenues for each function of the City’s governmental activities and for each of the City’s identifiable business-type activities. Direct expenses are those that are specifically associated with a program, function or activity. Program revenues include (a) charges paid by the recipients or beneficiaries of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. The City allocates the costs of certain governmental services to the costs of business-type activities (indirect expense allocation). These costs include allocated amounts of city management, centralized budgetary formulation and oversight, accounting, financial reporting, payroll, procurement contracting and oversight, investing and cash management, personnel services, etc. The allocations are charged to the BTAs based on the use of these services. As a matter of policy, the costs of certain governmental functions are not allocated to the business-type activities such as public safety, library and recreation and community services. Fund Financial Statements: The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The fund financial statements provide information about the City’s funds, including fiduciary funds. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as non-major funds. The City reports the following major governmental fund: General Fund The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. The City reports the following major proprietary funds: Water/Wastewater Fund This fund accounts for transactions related to water and wastewater services, including the payment of fees to Kent County for the treatment of sewage. The City also holds lease agreements with cell phone companies for equipment placed on City water towers. Electric Revenue Fund This fund incorporates all transactions related to the generation, transmission and distribution of electricity. The City has contracted with both The Energy Authority and North American Energy Services to manage the City’s power supply and generation assets. The City reports the following non-major funds: Internal Service Fund The City has created one internal service fund to account for the activities related to self-insured 54

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements Workers’ Compensation. Receipts are provided from contributions by the City’s three major funds. Expenses are related to payment of claims, premiums, and administration costs. Actuarial analyses are completed every three years to insure sufficient reserves for claims for the Workers’ Compensation Fund. Special Revenue Funds The City has ten Special Revenue Funds to account for proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. Fiduciary Funds Fiduciary funds consist of trust and agency funds and are used to report assets held by the City in a trustee or agency capacity for other purposes. These funds are, therefore, not available to support City programs. The City is the trustee for the City’s two pension plans, the Police Pension Fund and the Employee Pension Fund, as well as, the Other Post Employment Benefit Trust. The activity of these plans is accounted for in the Basic Financial Statements. Agency funds are used to account for assets held by the City as an agent for individuals, private organizations or other governments. The City has three agency funds. The City acts as the receiving and paying agent for the Downtown Dover Partnership and the Fourth of July Celebration Committee. B. Basis of Accounting and Measurement Focus Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. All Governmental Funds are accounted for using the modified accrual basis of accounting and the current financial resources measurement focus. Their revenues are recognized when they become measurable and available as net current assets. Revenues that are susceptible to accrual include property taxes, grants and billable service charges. All other revenues are accounted for when they are received. Property taxes are recognized in the fiscal period for which they are levied provided they are “available”- i.e., they are collected in the current period or are expected to be collected soon enough thereafter to be used to pay liabilities of the current period. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty-days after year-end, except for trash collection, which has a thirty-day collection period. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. The exception to this general rule is principal and interest on general long-term debt which is recognized when due. Also, claims and judgments and compensated absences are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. The government-wide financial statements as well as all proprietary and fiduciary trust funds are accounted for using the accrual basis of accounting and the economic resources measurement 55

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements focus. Agency funds have no measurement focus. A reconciliation of the governmental fund financial statements prepared on the modified accrual basis of accounting to the government-wide financial statements prepared on the accrual basis of accounting is also provided. The types of transactions included in program revenues in the government-wide statement of activities include charges for services, operating grants and capital grants. Operating income reported in the proprietary fund financial statements includes revenue and expenses related to the continuing operations of the fund. Principal operating revenue for proprietary funds is charges to customers for sales and services. Principal operating expenses are the costs of providing goods and services, which include purchased power, administrative expenses and depreciation of capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. C. New Pronouncements GASB Statement No. 67, “Financial Reporting for Pension Plans: an amendment of GASB Statement No. 25”, effective for periods beginning after June 15, 2013, replaces the requirements of Statements No. 25 and No. 50 related to pension plans that are administered through trusts or equivalent arrangements. The implementation of this pronouncement is included in the current year financial statements, note disclosures and required supplementary information. The above GASB statements have no material effect on the financial position of the City. GASB Statement No. 68, “Accounting and Financial Reporting for Pensions: an amendment of GASB Statement No. 27”, effective for periods beginning after June 15, 2014, replaces the requirements of Statements No. 27 and No. 50 related to pension plans that are administered through trusts or equivalent arrangements. The above GASB statement will have a material effect on the financial position of the City. The current estimated net pension liability for the City’s single employer pension plans is $29.3 million. Any liability for the State of Delaware cost-sharing plan is unknown at this time. GASB Statement No. 69, “Government Combinations and Disposals of Government Operations”, effective for periods beginning after December 15, 2013, requires disclosures to be made about government combinations and disposals of government operations to enable financial statement users to evaluate the nature and financial effects of those transactions. At the current time, the City has no government combinations or disposals of government operations. GASB Statement No. 70, “Accounting and Financial Reporting for Nonexchange Financial Guarantees”, effective for periods beginning after June 15, 2013, requires recognition of a liability when qualitative factors and historical data, if any, indicate that it is more likely than not that the government will be required to make a payment on the guarantee. The statement also requires the government to recognize revenue to the extent of the reduction in its guaranteed liabilities and specific note disclosures for nonexchange financial guarantees. At the current time, the City has no nonexchange financial guarantees with qualitative or historical factors that would suggest the inability of the obligor to pay the obligation. See Note 11(D) – Material Commitments – Downtown Dover Partnership. GASB Statement No. 71, “Pension Transition for Contributions Made Subsequent to the Measurement Date – An Amendment of GASB Statement No. 68”, to be applied simultaneously with the provisions of GASB 68 in the period after June 15, 2014, amends paragraph 137 of GASB 68. 56

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements D. Capital Assets and Long-Term Liabilities Capital assets used in Governmental Fund type operations (general capital assets) are accounted for in the government-wide financial statements rather than in the funds. Public domain ("infrastructure") general capital assets consisting of certain improvements other than buildings, including roads, bridges, curbs and gutters, streets and sidewalks, drainage systems and lighting systems, are capitalized in the government-wide financial statements along with other general capital assets. The capitalization threshold for the City’s assets is $5,000. Personal computers and related hardware valued under $5,000 are manually controlled by the Information Technology Department. All capital assets are valued at historical cost and donated assets are shown at a fair market value as of the date of donation. Depreciation has been provided on general capital assets and is shown in Note 4. Depreciation has been provided over the estimated useful lives using the straight-line method. Estimated useful lives are as follows: Buildings 20 - 50 years Infrastructure 20 - 50 years Vehicles 4 - 7 years Equipment, Furniture & Fixtures 5 - 15 years Long-term liabilities expected to be financed from governmental funds and the long-term estimated liabilities for compensated absences are accounted for in the government-wide financial statements, but not in the Governmental Funds. Depreciation of all exhaustible capital assets used by Proprietary Funds is charged as an expense against their operations. Accumulated depreciation is shown in Note 4 of this section. Depreciation in the proprietary funds has been provided over the estimated useful lives using the straight-line method. The estimated useful lives are presented below: Buildings, Mains & Plant 25 - 90 years Improvements 10 - 20 years Equipment 5 - 15 years Vehicles 4 - 7 years E. Budget Procedures Legally adopted budgets are prepared for the General Fund, Water/Wastewater Fund, Electric Revenue Fund, the Internal Service Fund and the following non-major special revenue funds: Municipal Street Aid Fund, Community Development Block Grant Fund (Federal), State Department of Transportation Grants Fund (Community Transportation), Police Grant Funds, and Library Grants Fund. The General Governmental Capital Projects Fund provides for separate budgets to cover the planning and control of capital items for the governmental programs. The financial transactions of this fund are included in the financial statements of the General Fund. The Electric Improvement and Extension Fund and the Water/Wastewater Improvement and Extension Fund are sections of each utility enterprise. These sections are required by bond resolutions. Separate budgets for these funds cover the planning and control of only the capital items of the utilities. The financial transactions of these funds are included in the financial statements of the Electric Revenue Fund and the Water/Wastewater Fund. The City prepares the budget for the General Fund revenues on a modified accrual basis. The expenditures are accounted for when the purchase orders are issued. The budget and actual 57

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements schedule (in the legal budget format (non-GAAP), adopted by the City) for the General Fund, the City’s major governmental fund, is presented in the required supplementary information section of this report. Budgets for the Electric Revenue Fund, Water/Wastewater Fund and Internal Service Fund are prepared on an accrual basis. Budgets are prepared under the assumption that the principal redemption of long-term debt must be assumed by Enterprise Fund activity in conformity with the bond ordinance. The Combining General Fund Balance Sheet and Combining Statement of Revenues, Expenditures and Changes in Fund Balances of the General Fund as well as the budget and actual schedules of the other funds are also presented in the supplementary information section of this report because they are “not required.” According to the City's procedures, the preceding year's ending net budgetary balances are considered as resources for the following year. The beginning balances become operating items of revenues in the budgets. Estimated ending budgetary balances provide the balancing amount for each budget. In accordance with the City’s financial policies, adopted by City Council, the major operating funds of the City are required to maintain an 8% minimum ending budget balance expressed as a percentage of operating revenues excluding the beginning budget balance. F. Major Transfers The Electric Revenue Fund and Water/Wastewater Fund annually transfer a budgeted portion of their revenues to the General Fund. In this fiscal year transfers were also made from the Realty Transfer Tax Fund, Municipal Street Aid Fund, Electronic Red Light Safety Program (ERLSP) Fund, State Department of Transportation (D.O.T.) Fund, and Police Grant Fund to the General Fund. The purpose of these transfers is to provide routine subsidies to the General Fund for operating functions, capital project expenditures and debt service requirements. All transfers between the General Fund and the non-major governmental funds are netted in the government-wide financial statements. G. Inventories and Prepaid Items Both inventories and prepaid items are accounted for using the consumption method. Inventories are treated as operational expenditures at the time of use rather than at the time of purchase for both the governmental and proprietary funds. Prepaid expenses are reflective of insurance policies and commitments due on July 1 for the following fiscal year. The warehouse inventories, consisting mostly of parts and supplies, are maintained on a perpetual inventory basis. Inventories of all funds are valued at cost and net of reserves, utilizing a weighted moving average method of valuation. The City maintains inventory reserves to charge off any damaged or obsolete items. The Electric Revenue Fund maintains fuel inventory for the generating assets on a perpetual basis and utilizes the weighted moving average method of valuation. H. Cash and Investments The City's cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments consist of United States Government and its agencies notes and bonds, corporate bonds and common stocks and open-end mutual funds. The fair value of investments is 58

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements determined by current market value. I. Accounts Receivable Allowances for uncollectible accounts are maintained and uncollectible accounts are charged off against these allowances. The authority to write off accounts is vested with the City Council. Current balances of allowances are as follows: General Fund $164,086 Water/Wastewater Fund 108,234 Electric Revenue Fund 586,346 J. Restricted Assets Certain assets are restricted because their use is limited by bond covenants, endowments, or other similar third party restrictions. Restricted assets as of June 30, 2014 total $41,784,421 including cash and cash equivalents of $13,668,152 and $28,116,269 in investments. Of this amount, $658,368 is attributed to governmental activities and $41,126,053 is attributable to business-type activities. K. Unbilled Service Receivables The City follows a policy of billing for services in accordance with billing cycle procedures. All known services rendered are billed and incorporated in the books at the end of the fiscal year. Billing information which is unreported by June 30, 2014, by the operating departments is billed and accounted for in the month the information is received. L. Bond Accounts/Issuance Costs The City has elected to recognize bond discounts and issuance cost in governmental funds, as well as the proprietary funds, as a current period expense in accordance with GASB 65. All unamortized bond discounts and issuance costs held by the General fund and the Proprietary funds have been expensed. M. Deferred inflows of resources In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes, demolitions, general billings, grass cutting, police extra-duty, and State grants. N. Fund Balances and Net Position Governmental fund balances are reported based on a hierarchy of constraints on the nature or specific purpose to which the funds can be spent. The classifications of fund balance are as follows:  The Non-spendable fund balance classification includes amounts that cannot be spent either because they are in a non-spendable form or because they are legally or contractually 59

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements required to be maintained intact.  The Restricted fund balance classification includes amounts that can be spent only for specific purposes because of the City Charter, the City Code, state or federal laws, or externally imposed conditions by grantors or creditors.  The Committed fund balance classification includes amounts that can be used only for specific purposes determined by the formal action of a City ordinance which is approved by City Council majority vote the highest level of decision-making authority.  The Assigned fund balance classification includes amounts authorized and established by City Council. The City’s Financial Policies as adopted by City Council includes the purpose and description of all classes of fund balance. Modifications require City Council approval.  The Unassigned fund balance classification includes amounts that have not met the criteria of the aforementioned fund balance classifications. The unassigned fund balance is available for expenditures as they are incurred. The General fund is the only fund that reports a positive unassigned fund balance amount. The city considers restricted, committed, or assigned amounts to have been spent when a related expenditure is incurred. Proprietary funds report net position in three categories: 1) Invested in capital assets net of related debt; 2) Restricted 3) Unrestricted Fund balances and net position are further explained in Note 7. O. Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. DEPOSITS AND INVESTMENTS A. Cash in Bank and Cash Equivalents Custodial credit risk – deposits. The bank collateralizes the City of Dover’s deposits over and above those covered by the $250,000 FDIC Insurance limit with specific securities, which are ‘marked to market’ daily against the aggregate balances. The market value of the collateral is at a minimum of or equal to 102% of the amount of applicable deposits. Collateral consists solely of either full faith and credit obligations of the United States Government or fixed rate obligations of agencies or instruments of the United States Government. On June 30, 2014, the carrying amount of unrestricted cash totaled $10,312,015 and the bank cash balances totaled $10,266,399. The carrying amount of restricted cash totaled $13,668,152 and the bank cash balances on restricted accounts totaled $13,661,351. The restricted deposits are held by the City for bond related transactions, special purpose operating and capital grants. Fiduciary fund deposits of $3,441,698 are excluded. B. Investments The City Council has adopted an investment policy which is reviewed every two years and updated 60

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements as needed for best practices. The Pension Boards have their own distinct investment policy over the Pension Trust funds since the objectives differ from those of the City. The City investments are segregated from the Pension Trust investments for clarity. As of June 30, 2014, the City had the following investments: i. Investments Held by Third Party Custodian Investment Type Fair Value (Years) Government-Wide: Fixed income securities: U.S. Government Treasuries $ 13,730,634 1.83 U. S. Government Agencies 13,723,905 2.38 Municipal Obligations 3,187,877 1.80 Corporate Bonds 17,209,042 2.76 Certificate of Deposit 5,270,571 1.49 Fair Value of fixed income securities 53,122,029 Portfolio weighted average maturity 2.24 Other investments: Money Market Mutual Funds & Certificate of Deposit 803,941 Equity Stock and Other 23,158 Total Other Investments 827,099 Total Government-Wide Investments $ 53,949,128 Interest rate risk: As a means of limiting its exposure to fair value losses arising from rising interest rates the City’s investment policy limits U.S. Government securities to a maximum maturity of 10 years from the date of purchase. For most other securities, the maximum maturity is five years from the date of purchase. Short-term cash flow balances are invested up to one year. The portfolio’s weighted average maturity is 2.24 years. The investments are held in the City’s name at a third party custodian. Credit risk: The City’s investment policy is to apply the prudent-person rule. Investments are made as a prudent person would be expected to act, with discretion and intelligence, to seek reasonable income, preserve capital and, in general, avoid speculative investments. As of June 30, 2014, the City’s fixed income and short-term investments had the following risk characteristics as compared to the Standard’s & Poor’s: Authorized Investments Policy Minimum Rating Category Portfolio Ratings Percent Allocation U.S. Government N/A AA+ 25.80% U.S. Government Agency N/A AA+ 24.40% Certificates of Deposit and Short-Term A-1 Short-Term A-1+ 9.90% Time Deposits Long-Term AA Long-Term AA- Corporate Debt Issued by a US Corporation Commercial Paper A-1 N/A Corporate Notes/Bonds AA AA- to AAA 32.40% Repurchase Agreements Short-Term A-1 N/A Long-Term AA Registered Investment Companies AAAm AAAm (money market funds) Municipal Obligations A AA to AA+ 6.00% Concentration of credit risk: The City has sector and issuer limitations on its investment portfolio as follows: 61

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements Authorized Investments Sector and Issuer Restrictions U.S. Government Up to 100% per sector U.S. Government Agency Up to 100% per sector Certificates of Deposits and Time Deposits Up to 25% per sector; 5% per issuer Corporate Debt Commercial Paper Up to 25% per sector; 5% per issuer Corporate Notes/Bonds Up to 50% per sector; 5% per issuer Delaware Domiciled Institutions Up to 20% per sector; 5% per issuer Repurchase Agreements Up to 25% per issuer Registered Investment Companies Up to 25% per issuer (money market funds) Mortgage-Backed Securities Up to 50% per sector Municipal Obligations Up to 30% per sector; 5% per issuer ii. Investments Held by Trustee for Post-Employment Benefits & Pensions Investment Type Fair Value (Years) Other Postemployment Benefits (OPEB) & Pension Funds (Trustee held): Corporate Bonds - OPEB Trust $ 6,962,485 1.14 Short-term corporate bond open-end mutual funds 2,560,899 0.42 Intermediate-term corporate bond open-end mutual funds 9,453,956 1.40 Long-term corporate bond open-end mutual funds 4,206,580 1.79 Fair value of fixed income investments 23,183,920 Portfolio weighted average maturity 1.19 Other investments: Domestic equity open-end mutual funds 26,303,052 International equity open-end mutual funds 13,017,605 Fair value of other investments 39,320,657 Total fair value OPEB and pension funds $ 62,504,577 The Pension Trust and OPEB Trust have their investments exclusively in open-end mutual funds, with limits on its investments as follows: Pension Trusts OPEB Trust Target Target Category Allocation Percentage Category Allocation Percentage Money Market 4.50% Money Market 2.00% Short Term Bonds 5.50% Short Term Bonds 8.00% Inflation Protected Bonds 6.00% Inflation Protected Bonds 2.00% Intermediate Term Bonds 8.00% Intermediate Term Bonds 10.00% Long Term Bonds 9.00% Long Term Bonds 10.00% High Yield Bond 6.00% High Yield Bond 8.00% Large Cap Value 10.00% Large Cap Value 11.00% Large Cap Growth 11.00% Large Cap Growth 10.00% Mid Cap 5.00% Mid Cap 5.00% Small Cap 7.00% Small Cap 8.00% Real Estate Investment 8.00% Real Estate Investment 6.00% Foreign Equity 10.00% Foreign Equity 10.00% Emerging Markets 10.00% Emerging Markets 10.00% 100.00% 100.00% 62

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements Custodial credit risk-investments: For an investment, this is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. To avoid custodial credit risk, it is the City’s policy to have its investments held at a third party custodian in the City’s name. 4. CAPITAL ASSETS A summary of the Capital asset activity for the year ended June 30, 2014 is presented on the following page: Beginning Ending Balance Increases Decreases Balance Governmental activities: Capital assets, not being depreciated Land $ 3,958,887 $ - $ 55,004 $ 3,903,883 Construction in progress 117,155 1,339,439 225,947 1,230,647 Total capital assets, not being depreciated 4,076,042 1,339,439 280,951 5,134,530 Capital assets, being depreciated: Buildings 30,553,526 78,136 - 30,631,662 Furniture and fixtures 833,722 - - 833,722 Equipment 7,716,290 485,364 376,866 7,824,788 Vehicles 4,658,460 640,765 84,301 5,214,924 Lights 614,531 18,832 - 633,363 Improvements other than buildings 40,001,940 1,440,989 2,400 41,440,529 Books and audio visuals 8,115 - 8,115 - Total capital assets, being depreciated 84,386,584 2,664,086 471,682 86,578,988 Less accumulated depreciation for: Buildings (4,209,411) (653,814) - (4,863,225) Furniture and fixtures (214,375) (71,634) - (286,009) Equipment (5,522,106) (371,449) 366,887 (5,526,668) Vehicles (3,541,605) (462,351) 78,349 (3,925,607) Lights (465,134) (10,454) - (475,588) Improvements other than buildings (20,445,841) (1,392,284) (10,055) (21,848,180) Books and audio visuals (8,136) - 8,136 - Total accumulated depreciation (34,406,608) (2,961,986) 443,317 (36,925,277) Total capital assets, being depreciated, net 49,979,976 (297,900) 28,365 49,653,711 Governmental activities capital assets, net $ 54,056,018 $ 1,041,539 $ 309,316 $ 54,788,241 (continued) 63

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements (continued) Beginning Ending Balance Increases Decreases Balance Business-type activities: Electric Revenue Fund Capital assets, not being depreciated Land $ 1,458,066 $ - $ - $ 1,458,066 Construction in progress 1,338,909 2,206,440 1,854,887 1,690,462 Total capital assets, not being depreciated 2,796,975 2,206,440 1,854,887 3,148,528 Capital assets, being depreciated Buildings 17,619,349 46,920 - 17,666,269 Production 65,040,049 873,235 - 65,913,284 Transmission 34,010,686 1,073,401 - 35,084,087 Distribution 61,752,469 736,743 100,265 62,388,947 Administration 1,743,754 - - 1,743,754 Vehicles 625,876 34,985 15,114 645,747 Total capital assets, being depreciated 180,792,183 2,765,284 115,379 183,442,088 Less accumulated depreciation for: Buildings (11,795,879) (376,201) - (12,172,080) Production (42,682,428) (1,320,366) - (44,002,794) Transmission (11,537,017) (1,239,173) - (12,776,190) Distribution (26,832,246) (1,650,692) 100,265 (28,382,673) Administration (1,316,532) (110,673) - (1,427,205) Vehicles (481,527) (51,015) 15,114 (517,428) Total accumulated depreciation (94,645,629) (4,748,120) 115,379 (99,278,370) Total capital assets, being depreciated, net 86,146,554 (1,982,836) - 84,163,718 Total electric revenue fund capital assets, net 88,943,529 223,604 1,854,887 87,312,246 Water/Wastewater Fund Capital assets, not being depreciated Land 163,240 - - 163,240 Construction in progress 1,089,187 1,605,698 27,191 2,667,694 Total capital assets, not being depreciated 1,252,427 1,605,698 27,191 2,830,934 Capital assets, being depreciated Plant, wells, pumping stations, and storage 16,169,666 103,095 - 16,272,761 Distribution mains, hydrants, and accessories 20,065,638 569,407 - 20,635,045 Sewage plant mains, and pumping stations 32,915,071 222,170 - 33,137,241 Vehicles and equipment 5,020,364 202,028 27,770 5,194,622 Total capital assets, being depreciated 74,170,739 1,096,700 27,770 75,239,669 Less accumulated depreciation for: Plant, wells, pumping stations, and storage (7,041,676) (343,292) - (7,384,968) Distribution mains, hydrant, and accessories (6,182,500) (390,187) - (6,572,687) Sewage plant mains, and pumping stations (11,870,361) (730,228) - (12,600,589) Vehicles and equipment (3,539,159) (292,218) 27,770 (3,803,607) Total accumulated depreciation (28,633,696) (1,755,925) 27,770 (30,361,851) Total capital assets, being depreciated, net 45,537,043 (659,225) - 44,877,818 Total water/wastewater fund capital assets, net 46,789,470 946,473 27,191 47,708,752 Business-type activities capital assets, net $ 135,732,999 $ 1,170,077 $ 1,882,078 $ 135,020,998 64

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements Depreciation expense was charged to functions/ programs of the primary government as follows: Governmental activities: General government $ 9,151 Central services 91,525 Public safety 419,499 Public works 1,733,310 Library and recreation 644,896 Financial administration 63,605 Total depreciation expense - governmental activities $ 2,961,986 5. LONG -TERM OBLIGATIONS A. Summary of Bonded Indebtedness by Issue Original Remaining Interest Maturity Arbitrage Purpose Governmental Activities 2003 General Obligation Bonds $ 3,430,000 $ 695,000 3.87% 7/1/04 - 7/1/16 No Refunding of '92 &'95 issues 2012 General Obligation Bonds $ 3,500,000 $ 3,354,758 2.60% 6/25/13 - 5/25/19 No Construction of New Library, Street Paving Program Business Type Activities Water/Wastewater Bonds 2000 State of Delaware - $ 750,000 $ 283,337 3.60% 10/1/00 - 4/1/20 No Wastewater Pump Station # 7 - Leipsic Revolving Loan Fund - Municipal Revenue 2009 State of Delaware - $ 5,581,059 $ 5,103,095 2.00% 12/1/12 - 12/1/31 No Pump station replacements/upgrades and Revolving Loan Fund - Municipal sanitary sewer main relining Revenue 2010 State of Delaware - $ 2,404,017 $ 2,151,142 2.47% 4/1/12 - 10/1/30 No Water quality improvements and main Revolving Loan Fund - Municipal replacements Revenue 2011 State of Delaware - $ 765,060 $ 749,773 2.00% 6/1/12 - 12/1/31 No Pump station replacements/upgrades and Revolving Loan Fund - Municipal sanitary sewer main relining Revenue 2013 Revenue Bonds $ 6,125,000 $ 6,125,000 3.58% 7/1/14 - 7/1/33 Yes Water and Wastewater capital project financing, refund 2003 Series WWW bonds (Coverage ratio on Water/Wastewater Bonds requires net revenues to be at least 1.2 times the maximum annual debt service) Electric Revenue Bonds 2008 Revenue Bonds $ 22,200,000 $ 20,240,000 4.81% 7/1/09 - 7/1/33 Yes Expansion and upgrades of electric system 2010 Revenue Bonds $ 8,810,000 $ 3,700,000 1.78% 7/1/11 - 7/1/15 Yes Complete refund 2004 Series (Coverage ratio on Electric Bonds requires net revenues to be at least 1.25 times the maximum annual debt service) 65

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements B. Status as of June 30, 2014 – General Obligation Bonds Long-term indebtedness of the City of Dover consists of the following general purpose General Obligation Bonds: 2003 Series $ 695,000 2012 Series 3,354,758 $ 4,049,758 The total General Obligation Bonds outstanding amount includes $358,650 payable within one year. C. Change in Long-Term Debt The following tables summarize the debt transactions for the year ended June 30, 2014: i. General Long-Term Debt Balance Balance Payable within Item 7/01/13 Additions Reductions 6/30/14 one Year Compensated Absences $ 2,081,070 $ 1,274,860 $ 1,161,969 $ 2,193,961 $ 1,046,702 General Obligation Bonds 4,478,997 - 429,239 4,049,758 358,650 OPEB Obligation 13,112,314 1,555,919 - 14,668,233 - Sub-total of General Long-Term Debt $ 19,672,381 $ 2,830,779 $ 1,591,208 $ 20,911,952 $ 1,405,352 ii. Enterprise Funds Debt Water/Wastewater Fund Balance Balance Payable within Item 7/01/13 Additions Reductions 6/30/14 one Year Compensated Absences $ 171,655 $ 94,313 $ 97,261 $ 168,707 $ 75,698 Revenue Bonds-Water and Wastewater (a) 2,300,000 6,125,000 2,300,000 6,125,000 335,000 State of Delaware Municipal Revenue Bond - Wastewater 6,372,454 62,000 298,249 6,136,205 320,729 State of Delaware Municipal Revenue Bond - Water 2,254,263 - 103,121 2,151,142 105,831 OPEB Obligation 449,016 36,565 - 485,581 - Sub-total of Water/ Wastewater Fund 11,547,388 6,317,878 2,798,631 15,066,635 837,258 (a) During fiscal year 2014, the Water/Wastewater fund issued Series 2013 Revenue bonds. The proceeds are to be used to: (1) finance sewer infrastructure and a water tower at the Garrison Oak technical park, (2) refund, on a current refunding basis, the Series 2003 water and sewer bonds, (3) fund required reserves, and (4) pay the costs of issuance of the Series 2013 Bonds. 66

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements iii. Enterprise Funds Debt Electric Revenue Fund Balance Balance Payable within Item 7/01/13 Additions Reductions 6/30/14 one Year Compensated Absences $ 627,716 $ 236,629 $ 328,431 $ 535,914 $ 174,165 Revenue Bonds 26,110,000 - 2,170,000 23,940,000 2,260,000 Sub-total of Electric Revenue Fund 26,737,716 236,629 2,498,431 24,475,914 2,434,165 Sub-total of Enterprise Fund Debt 38,285,104 6,554,507 5,297,062 39,542,549 3,271,423 Grand Totals of Long-Term Debt $ 57,957,485 $ 9,385,286 $ 6,888,270 $ 60,454,501 $ 4,676,775 The City does not receive reimbursement for debt service from any other governmental units. The City does not have any special assessment debt or defeased bonds as of June 30, 2014. D. Debt Service Requirements The following are the debt service requirements to maturity on the City's general obligation bonds and revenue bonds. i. Governmental Activities: 2003 General Obligation 2012 General Obligation Fiscal Bonds Bonds Year Principal Interest Principal Interest Total 2015 $ 220,000 $ 22,950 $ 138,650 $ 86,753 $ 468,353 2016 230,000 14,285 142,123 83,280 469,688 2017 245,000 4,900 146,142 79,261 475,303 2018 - - 150,041 75,362 225,403 2019 - - 2,777,802 65,457 2,843,259 Total $ 695,000 $ 42,135 $ 3,354,758 $ 390,113 $ 4,482,006 67

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements ii. Business-type Activities a. Water/Wastewater Fund 2000 Municipal Revenue Bonds Fiscal 2013 Revenue Bonds (Wastewater) Year Principal Interest Principal Interest 2015 $ 335,000 $ 197,419 $ 43,113 $ 9,816 2016 325,000 187,518 44,679 8,250 2017 330,000 177,694 46,302 6,627 2018 340,000 167,643 47,984 4,945 2019 355,000 157,219 49,727 3,202 2020 360,000 146,493 51,532 1,396 2021 375,000 135,469 - - 2022 385,000 124,069 - - 2023 395,000 112,369 - - 2024 410,000 100,294 - - 2025 215,000 90,919 - - 2026 220,000 84,256 - - 2027 225,000 77,106 - - 2028 235,000 69,281 - - 2029 245,000 60,269 - - 2030 255,000 50,269 - - 2031 265,000 39,869 - - 2032 275,000 29,069 - - 2033 285,000 17,869 - - 2034 295,000 6,084 - - Total $ 6,125,000 $ 2,031,178 $ 283,337 $ 34,236 2009 Municipal Revenue 2010 Municipal Revenue 2011 Municipal Revenue Fiscal Bonds (Wastewater) Bonds (Water) Bonds (Wastewater) Year Principal Interest Principal Interest Principal Interest 2015 $ 246,211 $ 100,837 $ 105,831 $ 55,459 $ 31,405 $ 26,719 2016 251,160 95,888 108,611 52,679 32,546 25,578 2017 256,208 90,840 111,464 49,825 33,729 24,395 2018 261,358 85,690 114,392 46,897 34,955 23,170 2019 266,611 80,437 117,397 43,892 36,225 21,900 2020 271,970 75,078 120,481 40,808 37,541 20,584 2021 277,437 69,611 123,646 37,643 38,905 19,219 2022 283,013 64,035 126,895 34,395 40,318 17,806 2023 288,702 58,346 130,228 31,061 41,783 16,341 2024 294,505 52,543 133,649 27,640 43,302 14,823 2025 300,424 46,624 137,160 24,129 44,875 13,250 2026 306,463 40,585 140,764 20,526 46,505 11,619 2027 312,623 34,425 144,461 16,828 48,195 9,930 2028 318,906 28,142 148,257 13,033 49,946 8,178 2029 325,316 21,732 152,151 9,138 51,761 6,364 2030 331,855 15,193 156,148 5,141 53,642 4,483 2031 338,526 8,522 79,607 1,039 55,592 2,534 2032 171,807 1,718 - - 28,548 514 Total $ 5,103,095 $ 970,246 $ 2,151,142 $ 510,133 $ 749,773 $ 267,407 68

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements b. Electric Fund Fiscal 2008 Revenue Bonds 2010 Revenue Bonds Business-type Year Principal Interest Principal Interest Activities 2015 $ 450,000 $ 953,704 $ 1,810,000 $ 130,700 $ 4,496,214 2016 475,000 930,579 1,890,000 47,250 4,474,738 2017 695,000 901,329 - - 2,723,413 2018 730,000 865,704 - - 2,722,738 2019 765,000 831,580 - - 2,728,190 2020 800,000 798,706 - - 2,724,589 2021 840,000 763,856 - - 2,363,213 2022 880,000 726,756 - - 2,682,287 2023 925,000 686,694 - - 2,685,524 2024 970,000 644,056 - - 2,690,812 2025 1,015,000 599,394 - - 2,486,775 2026 1,065,000 551,928 - - 2,487,646 2027 1,120,000 501,400 - - 2,489,968 2028 1,175,000 446,125 - - 2,491,868 2029 1,230,000 386,000 - - 2,487,731 2030 1,290,000 323,000 - - 2,484,731 2031 1,355,000 256,875 - - 2,402,564 2032 1,420,000 187,500 - - 2,114,156 2033 1,485,000 114,875 - - 1,902,744 2034 1,555,000 38,875 - - 1,894,959 Total $ 20,240,000 $ 11,508,936 $ 3,700,000 $ 177,950 $ 53,534,860 The preceding tables do not include compensated absences. 6. RESTRICTED NET POSITION In the government-wide financial statements the restricted net position of the governmental activities and business type activities are as follows: Governmental Activities Grants-capital projects This represents the State DOT grant $ 143,532 reported in the non-major special revenue funds. Grants-public safety These represent the Police grants, ERLSP 247,628 grant and Substance Abuse Prevention grant in the special revenue type funds. Other Purposes These represent all other funds reported in 220,894 the special revenue type, except the grants reserved for capital construction and public safety. Also included is an endowment from Mary Elizabeth Paton and patronage stocks. Total Restricted Net Position $ 612,054 Business Type Activities Net restricted position for construction purposes - expendable Water/Wastewater Restrictions on investments $ 2,955,660 imposed by bond covenants Electric Restrictions on investments 33,168,095 imposed by bond covenants Total Restricted Net Position $ 36,123,755 69

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements 7. FUND BALANCES & NET POSITION In the governmental fund financial statements, fund balances are reported based on a hierarchy of constraints on the specific purposes for which the funds can be spent. Non-spendable fund balances represent items that are not in spendable form and not expected to be converted to cash. This criterion also applies to the corpus of permanent funds, which would include the Mary Paton library endowment. Restricted fund balances represent amounts that have externally imposed restrictions by creditors, grantors, enabling legislation or laws and regulations of other governments. The fund balances of the City’s grant funds fall into this category, as well as a couple of accounts that have contractual restrictions imposed by a third party. Committed fund balances represent amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision-making authority. These amounts cannot be used for any other purpose unless the government removes or changes the specified use by taking the same type of action to which it previously committed the amount. Assigned fund balances represent amounts constrained by the City’s intent to be used for specific purposes. These amounts represent the City’s capital asset appropriations and the City’s matching funds for grant related projects. Also, included are donated assets to be used for law enforcement purposes. The constraints placed on assigned fund balances are implemented through internal processes such as a budget ordinance or motion of City Council. Therefore, assigned fund balances do not have the same restrictive nature as a restricted fund balance. Unassigned fund balance is the residual amount that has not met the criteria for the aforementioned classifications. The unassigned fund balance is available for expenditures as they are incurred. The composition of the City fund balances is as follows: 70

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements Other General Governmental Fund Funds Total Fund balances: Nonspendable: Inventory & Prepaids $ 186,290 $ 2,447 $ 188,737 Patronage Stock 16,594 - 16,594 Library Endowment 5,000 - 5,000 Subtotal Nonspendable: 207,884 2,447 210,331 Restricted for: Library Endowment Interest 1,698 - 1,698 Verizon cable franchise 127,778 - 127,778 Highway resurfacing - 143,532 143,532 ERLSP - 100 100 CDBG - 44,494 44,494 CDBG- State for ADA Improvements - 2,014 2,014 Substance Abuse Prevention - 75,466 75,466 Municiple Street Aid - 100 100 Library Grants - 44,810 44,810 Police Grants - 172,062 172,062 Subtotal Restricted for: 129,476 482,578 612,054 Committed to: Contingency 467,269 - 467,269 Encumbrances 37,377 - 37,377 Parkland 218,654 - 218,654 Subtotal Committed to: 723,300 - 723,300 Assigned to: Capital Assets 3,151,840 - 3,151,840 Police Investigations 11,591 - 11,591 Subtotal Assigned to: 3,163,431 - 3,163,431 Unassigned 3,435,079 - 3,435,079 Total fund balances $ 7,659,170 $ 485,025 $ 8,144,195 8. PROPERTY TAXES Property taxes are levied under the authority of the City Charter on all real property located within the City limits. The City assessor is in charge of the property assessments and the City Council levies the property tax rate. The following table provides important dates with reference to property taxes. Beginning of fiscal year for taxes July 1 Tax rate levied June 25 Taxes billed July 1 Taxes due and payable at par July 31 Penalty of one and one half percent starts August 1 Lien established on property for property taxes July 1 Tax sales of property with unpaid taxes 2 years from date of billing There are no material delinquent property taxes as of June 30, 2014. 71

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements 9. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances as of June 30, 2014 is as follows: A. Due to/from other funds – Charges and Allocations Receivable Fund Payable Fund Amount General Fund Non-Major Governmental Funds $ 117,482 Water/ Wastewater Fund 202,314 Electric Revenue Fund 549,970 Water/ Wastewater Fund General Fund 17,540 Electric Fund General Fund 1,224 Water/Wastewater Fund 36,628 Total $ 925,158 The outstanding balances between funds result mainly from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. B. Interfund Transfers Transfers In - Transfers Out General Fund Non-Major Governmental Funds $ 2,958,445 Water/ Wastewater Fund 500,000 Electric Revenue Fund 8,000,000 Total $ 11,458,445 Transfers are generally made for the purpose of providing operating capital or debt service subsidies to the receiving fund in accordance with City policy. 10. RENTAL INCOME The City currently has two lease agreements at the Garrison Oak Technical Park (GOTP) that are included in miscellaneous revenue in the General Fund. The first lease is with LS Power – White Oak Solar Energy LLC, which generated $58,506 in rental income and the second lease is with Garrison Energy Center which generated $34,450 in rental income. The City’s Electric Revenue Fund owns a professional office building which houses the City’s Customer Service, Finance and Information Technology Departments. At June 30, 2014, the City had leases with three tenants for the remaining space available. Lease revenue is $159,109 in the Electric Revenue Fund consisting of office space rental of $140,531 and pole attachment rentals of $18,578. The City maintains several water tower leases for a group of telecommunications companies. These are recorded as revenue of the Water/Wastewater Fund and total $360,307 in the current fiscal year. 72

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements 11. MATERIAL COMMITMENTS A. The City budgets monies to assist the volunteer fire company with payments on two pieces of firefighting equipment. The apparatus payments are budgeted as expenditures in the Governmental Capital Projects Fund budget. The payments are as follows: Ladder #2 $ 92,901 Ladder #1 $145,614 B. The City entered into a five-year management contract with The Energy Authority effective July 1, 2011 to provide a market-based approach for power supply management. The Energy Authority manages energy purchases and utilizes the City’s generating assets to provide a level of rate stability as necessary to mitigate the effects of rising and volatile energy prices. The Energy Authority also provides oversight of the plant operator contract and monitors their performance. C. The City also entered into a management contract with North American Energy Services (NAES) to operate and maintain the generating assets of the electric utility in May 2006. The City extended the contract with NAES through June 30, 2015. The City has incorporated the budgets and financial activity of the plant into its procedures used for all other divisions of the electric utility. These procedures include a line item budget and adherence to City policies. All personnel are employed by NAES and personnel costs are billed to the City bi-weekly. Any capital improvements are included in the City’s capital improvement plan. The contract also provides for a monthly management fee and a performance incentive based on budget and plant performance. The fiscal year 2014 annual cost for management and the incentive is $368,536 and is included in the plant-operating budget. D. The City is the guarantor on two $1.3 million loans held by the Downtown Dover Partnership. The loans are secured by two parcels in the downtown business district that the Downtown Dover Partnership is marketing for its redevelopment initiative. The interest on both of the loans is paid monthly from rental receipts the Partnership receives from its current tenants on the properties. Downtown Dover Partnership has refinanced one of the original notes that had a balloon payment due and now pays monthly payments including principal and interest for both loans. 12. FORWARD CONTRACTS Pursuant to the July 1, 2011 Energy Management Agreement between the City and The Energy Authority (TEA), the City has formed an Executive Risk Management Committee (ERMC). The ERMC has adopted a Governing Policy for Energy Commodity Risk Management (Policy) aimed at addressing the energy commodity risks and the Procedures and Controls Manual for Energy Commodity Risk Management (“Procedures Manual”). The Procedures Manual further describes the risk management philosophy under which TEA, the City’s designated provider of energy risk management services conducts its activities. The Procedures Manual authorizes TEA to enter into physical forward transactions which shall be governed by Edison Electric Institute (EEI), North American Energy Standards Board (NAESB), or similar agreements with counterparties approved by the City. These agreements will enable the City to hedge the forward price of purchased power, natural gas or fuel oil for delivery as needed to meet its load requirements. No speculative transactions for volumes in excess of forecasted power and fuel needs are permitted. TEA also provides advisory services to the City for financial hedges in determining if they would be beneficial to mitigate 73

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements market and credit risk. Under the Procedures manual the City will not extend credit to any potential counterparty that has a credit rating below investment grade (defined as BBB as rated by Standard & Poor’s or Baa2 as rated by Moody’s). Any counterparty that is unrated by either S & P or Moody’s must be approved by the ERMC prior to the execution of any trading activities. Credit risk is mitigated through the use of collateral thresholds, credit limits, maximum nominal exposure and term limitations. A collateral threshold is the amount of unsecured credit granted to the counterparty. Unsecured credit exposure includes amounts owed by the counterparty, whether billed or not, and the market-to-market differences in value of any collateral held. Any net exposure above the collateral threshold will require the posting of collateral by the counterparty. Collateral thresholds, term limitations and credit exposure limits are subject to maximums as established by the ERMC. Counterparty Credit Risk ($000’s) Maximum Amount Counterparty or Counterparty Line of Loss due to Credit Counterparty Guarantor Credit Collateral Description Threshold Availability Risk w/o Respect to Rating Collateral ($) No Collateral if exposure under Barclays Bank, PLC A- $15,000 $13,856 $1,144 specified threshold No Collateral if exposure under BP Energy Company BBB+ $15,000 $15,000 $0 specified threshold No Collateral if exposure under Coectiv Energy Supply, Inc BBB- $3,000 $3,000 $0 specified threshold Up to $15,000 is guaranteed buy DB Energy Trading, LLC A $15,000 $13,648 $1,352 Deutsche Bank AG No Collateral if exposure under EDF Trading North America, LLC A- $18,000 $17,628 $372 specified threshold No Collateral if exposure under Exelon Generation Company, LLC BBB $30,000 $24,951 $5,049 specified threshold No Collateral if exposure under specified threshold in the event of Integrys Energy Services, Inc BBB+ $10,000 $9,216 $784 potential default, performance from counter party is required No Collateral if exposure under Macquarie Energy, LLC A $15,000 $14,023 $977 specified threshold Unlimited dollars are guaranteed by Morgan Stanley Capital Group, Inc BBB+ $10,000 $8,974 $1,026 Morgan Stanley Up to $10,000 is guaranteed by NextEra Energy Power Marketing, LLC BBB+ $10,000 $6,884 $3,116 NextEra Energy Capital Holdings No Collateral if exposure under Public Service Electric and Gas Company BBB+ $12,000 $12,000 $0 specified threshold No Collateral if exposure under Sempra Energy Trading BBB+ $15,000 $15,000 $0 specified threshold 13. SUBSEQUENT EVENTS On November 14, 2014 the City closed on a $4,135,000 PNC Bank Qualified Loan (General Obligation) to finance capital improvements (Series A - $3,660,000) as well as refund the 2003 G.O. Bonds (Series B - $475,000) for the last two outstanding cusips. 14. INSURANCE A. Health Insurance – State of Delaware The City participates in the State of Delaware Health Insurance Program. The State offers four health plan options. The administration of benefits is coordinated with Aetna and Blue Cross Blue Shield of Delaware. Pre-determined premiums consisting of the City and 74

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements employee contributions are subsequently paid out to the State of Delaware. B. Workers’ Compensation Fund – Self-Insurance On July 1, 1990, the City began self-insuring its Workers’ Compensation insurance. For this purpose, the City has established a separate fund. Claims are processed and administered by a third party administrator. The City manages the revenue and expenditures in this fund and maintains all the records. The City maintains a fund balance to cover any incurred but not reported claims. AMI Risk Consultants completed an updated valuation in fiscal year 2013. As of June 30, 2014, there is $515,432 reserved for open claims in this fund. An appropriate umbrella policy for the excess coverage has been purchased and is in effect as of June 30, 2014. Workers’ Compensation activity is as follows: 2014 2013 Claims payable beginning of year $ 481,951 $ 474,281 Claims incurred 529,020 433,214 Payment of claims (495,539) (425,544) Claims payable end of year $ 515,432 $ 481,951 C. Other than Health or Workers’ Compensation Insurance The City purchases commercial insurance policies to cover risks not insured through self- insurance funds. The City has designated a contingency account to provide for uninsured capital losses (See Note 7). There have been no significant reductions or settlements exceeding coverage in the past five fiscal years. 15. COMPENSATED ABSENCES The City grants a specific number of vacation days with pay to its employees. Upon termination or retirement, an employee is paid for accumulated vacation days. The City also grants one paid sick day per month to all employees with the exception of employees covered by the International Brotherhood of Electric Workers (IBEW) contract. The IBEW employees are granted eleven sick days per year. The City of Dover follows a terminal leave policy which varies with each of the four unions as well as the non-bargaining group. The maximum accumulated sick days paid upon retirement is 150 days for 25 years of service. No accrued sick leave is paid when an employee is terminated. In the government-wide and proprietary fund financial statements, unpaid compensated absences are recorded as a liability as the vested employees' benefits accrue, to the extent it is probable that the employee will be paid for sick benefits at retirement. In governmental funds, compensated absences are recorded as expenditures as payments become due; accordingly, no liability is recorded in the Governmental Funds statement. Typically the General Fund has been used in prior years to liquidate the liability for compensated absences recorded in governmental activities. 75

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements 16. OTHER POST EMPLOYMENT BENEFITS Plan Description On May 11, 2009 the City of Dover Other Post-Employment Benefits Trust (OPEB Trust) was established pursuant to Section 115 of the Internal Revenue Code. Policy for and management of the OPEB benefits provided to retirees are the responsibility of the City of Dover. No stand- alone financial report is issued for the OPEB Trust. The OPEB Trust is a single-employer defined benefit plan. The OPEB Trust provides retirement medical coverage to pensioners and their eligible dependents in the City of Dover defined benefit and defined contribution pension plans. Plan Administration Management of the plan investments are fully vested with the City of Dover Employees” Police Pension Board as established in the City Code, which consists of three elected by plan members, two Council members appointed by the Council President, the City Controller/Treasurer, and the City Manager. The City Controller/Treasurer serves as an ex-officio member. Milliman of Albany, New York provides asset management advisory and consulting services to the Board. The City purchases health insurance from the State of Delaware through a cooperative purchasing arrangement permitted by State code. The State Office of Benefits provides the City with the medical insurance premiums by type of coverage and carrier during the budget cycle each year. The City also pays a five percent risk premium and contract administration fee for each contract in addition to the premium. Any premiums paid over or under the benefits paid out for City employees revert to the State. Membership of the plan consisted of the following at June 30, 2014: Retirees and beneficiaries receiving benefits 265 Terminated plan members entitled to but not yet receiving the benefits 15 Active eligible plan members 316 Total 596 Substantially all City employees become eligible for post-retirement benefits if they reach retirement age while working for the City. The costs of providing these benefits are shared between the City and the retired employee. The Dover Organization of Employees (DOE) union employees hired after July 1, 1994 are not eligible for post-retirement medical benefits if they elect early retirement. The eligibility provisions for early retirement are as follows:  Age 55 with 10 years of continuing service, or  If hired before May 1, 1994, 25 years of continuous service, or has attained the age of 50 years and completed 20 years of continuous service, or  If hired May 1, 1994 or later, Age 55, and whose attained age plus years of continuous service is equal to or greater than 80 Spouse and Survivor Coverage: Spouse and survivor coverage are both available under any of the plan options with similar retiree contributions with one exception. The International Brotherhood of Electrical Workers (IBEW) collective bargaining agreement does not include spouse and survivor coverage. 76

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements Employer and Employee Contributions: The City maintains contracts with each of its collective bargaining units. The Fraternal Order of Police Lodge #15 (FOP) and the Dover Organization of Employees (DOE) union contracts renewed effective July 1, 2012 and are up for review prior to contract end date of June 30, 2015. The International Brotherhood of Electric Workers (IBEW) contract period is July 1, 2013 through June 30, 2017. Each of these contracts includes a provision, for 15% employee contributions for all health care plans regardless of coverage for those employees hired prior to July 1, 2014. This same provision is implemented for non-bargaining (management) employees as well as the FOP and DOE members. The IBEW union contract provides that for those employees hired after July 1, 2014 the employee contributions will increase to 20% for all health plans regardless of coverage. On July 27, 2012 a group of non-bargaining employees petitioned the Public Employment Relations Board for union representation by the American Federation of State, County, and Municipal Employees, Council 81. The petition was granted and a majority vote of the applicable employees approved the union affiliation. Contract negotiations began on July 11, 2013 and continued throughout fiscal year 2014. The City of Dover funds the other postemployment benefits for current retirees on a pay-as-you- go basis along with funding for future benefits at a rate that is approved in the annual budget, but not actuarially determined. Additional funding has also been provided on an ad hoc basis. The employer contributions towards retiree health care premiums this fiscal year are as follows: General Government $ 3,108,484 Water/Wastewater Fund 303,913 Electric Revenue Fund 1,673,783 Total Benefit Provided $ 5,086,180 Transactions are recorded in the OPEB Trust for the payment of administrative and investment expenses and financed through investment earnings. City appropriations and other employer contributions for health care are recorded in the OPEB Trust. The OPEB Board of Trustees is responsible for the management of the trust investments. Contributions The contribution rates for the employer are established annually by the budgeting process of the City. Those rates include an employer contribution based on projected pay-as-you-go financing requirements as a percent of premiums, with an additional amount to prefund benefits, which is not actuarially determined. Annual OPEB Cost and Net OPEB Obligation/ (Asset) The City’s annual OPEB cost is calculated based on the Annual Required Contribution (ARC) of the employer, an amount actuarially determined in accordance with GAAP. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period of thirty years. Amounts “required” but not actually set aside to pay for these benefits are accumulated as part of the net OPEB obligations. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and the City’s net OPEB obligation: 77

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements Water/ Wastewater Governmental Fund Electric Fund Total Activities Activities Activities Annual Required contribution $ 5,948,442 $ 4,842,572 $ 346,789 $ 759,081 Interest on OPEB obligation 698,365 735,416 26,049 (63,100) Adjustment to annual required contribution (867,558) (913,585) (32,360) 78,387 Annual OPEB Cost 5,779,249 4,664,403 340,478 774,368 Employer Contributions (5,086,180) (3,108,484) (303,913) (1,673,783) Increase/(decrease) in net OPEB obligation 693,069 1,555,919 36,565 (899,415) Net OPEB obligation (asset) at beginning of year 12,392,061 13,112,314 449,016 (1,169,269) Net OPEB obligation (asset) at end of year $ 13,085,130 $ 14,668,233 $ 485,581 $ (2,068,684) The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation thru fiscal year 2014 are as follows: Percentage Fiscal Year Annual of Annual Net Ended OPEB OPEB Cost OPEB June 30 Cost Contributed Obligation 2012 $ 7,528,602 75.0% $ 10,463,722 2013 $ 5,948,117 67.6% $ 12,392,061 2014 $ 5,779,249 61.1% $ 13,085,130 The City did not meet its funding obligation for Fiscal Year 2014. In 2009 the City elected a ten- year phase-in plan to achieve the appropriate funding level. Fiscal Year ending June 30, 2014 was the sixth year of the phase-in to full funding of the ARC. The City continues to work with its collective bargaining units for alternative benefit plan options to reduce the Actuarial Accrued Liability (AAL) and its ARC. Funded Status and Funding Progress As of June 30, 2014, the most recent GASB 45 Actuarial Valuation date, the plan was 19.4% funded. The actuarial accrued liability for benefits was $70.4 million, and the actuarial value of assets was $13.6 million, resulting in an unfunded actuarial accrued liability (UAAL) of $56.8 million for the primary government. The covered payroll (annual payroll of active employees covered by the plan) was $17.5 million, and the ratio of the UAAL to the covered payroll was 324%. The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, present multiyear trend information regarding whether the actuarial values of plan assets are increasing or decreasing over time relative to the AALs for benefits. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the actuarially determined contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the OPEB plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit 78

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long- term perspective of the calculations. The Projected Unit Credit Cost Method was used to determine the Annual Required Contribution for the June 30, 2014 actuarial valuation. Investments are valued at market rates. The actuarial assumptions included a 5.6% phase-in investment rate of return, which is a blended rate of the full funding return on plan assets of 7% and a unfunded discount rate of 3.5%. The discount rate of 5.6% is representative of the ten-year phase-in plan. The UAAL is being amortized as a level dollar amount over 30 years based on an open group. The inflation assumption is 7.80% for those less than age 65 and 7.20% for those who are greater than or equal to age 65. 17. DEFERRED COMPENSATION PLAN Effective November 14, 1983, the City added a self-directed 457 Deferred Compensation Plan to its employee benefit options. The plan is administered by the International City Management Retirement Corporation (RC). The assets are held in the name of each participant with the ICMA (International City/County Management Associations) Retirement Trust. Employees are eligible to make contributions to the plan not to exceed the ceiling set by federal regulations. The City later added an alternative investment firm for the Deferred Compensation Plan with Nationwide Retirement Solutions. In May 1994, the City offered to employees the 457 Deferred Compensation Plan as their pension plan in lieu of participation in the General Employee Pension Plan. At that time 41 employees opted out of the Defined Benefit Pension Plan and enrolled in the Deferred Compensation Plan. The ICMA 457 Deferred Compensation Plan has assets of $7,427,375 (market value) as of June 30, 2014, with 133 contributing employees. The Nationwide plan has assets of $3,281,713 (market value) as of June 30, 2014 with 23 contributing employees. Quarterly statements are mailed to each participant by the plan administrators. All administration fees are borne by the participants. All contributions are 100% vested upon election of the plan. Employees are eligible to withdraw or rollover to another plan the employer and employee benefits upon separation of service. Withdrawals prior to age 59½ could be subject to penalty. Employees who select the defined benefit plan are also eligible for the 457 Deferred Compensation Plan. No matching employer contribution is made to the 457 Deferred Compensation Plan. As of June 30, 2014, there are 324 employees eligible to enroll in the 457 Deferred Compensation Plan. 18. RETIREMENT PLANS The City participates and/or manages four retirement plans on behalf of its employees. Three of the pension plans are defined benefit plans and one is a defined contribution plan. Two of the defined benefit plans are closed to new hires. All full-time employees are required to enroll in a pension plan. During fiscal year 2014 the total wages were $19.1 and the total pensionable wages were $17.5 for all full-time employees. The number of employees eligible for pension benefits as of June 30, 2014 is 324. A. Defined Contribution Plan Effective July 1, 2000, the City implemented an IRC 401a Money Purchase Plan “401a Plan,” a self-directed defined contribution plan, as an alternative choice for pension benefits. The contribution and funding requirements of the plan are established by the City and may be amended 79

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements by the City. The plan is administered by the International City Management Retirement Corporation (RC). The assets are held in the name of each participant with the ICMA (International City/County Management Associations) Retirement Trust. Quarterly statements are mailed to each participant by RC. All administration fees are borne by the participants. The City provides a 3% match of the employees required contribution to the 401a Plan, and up to an additional 3% to the 401a Plan for a potential total contribution of 6%, if the employee contributes up to an additional 3% to their 457 Plan (see note 17 – Deferred Compensation Plan). The 401a Plan and 457 Plan contributions are calculated on base wages plus on-call pay, pay adjustments, and scheduled overtime. All full-time regular employees are eligible, excluding law enforcement personnel. Personnel that elect the defined contribution plan are not eligible for the defined benefit plan. All contributions are 100% vested upon election of the plan. To be eligible for benefit payments, the participant must meet the same eligibility requirements as the participants in the defined benefit plan. Employees are eligible to withdraw or rollover to another plan the employer and employee benefits upon separation of service. Withdrawals prior to age 59 ½ could be subject to penalty. As of June 30, 2014, there were 112 full-time employees enrolled in the 401a plan. The City contributed a total of $247,841 on wages of approximately $4.7 million. Employees contributed $140,602 to the 401a Money Purchase Plan and $487,332 to the 457 Deferred Compensation Plans (see also Note 17). The market value of the 401a plan assets totaled $4,477,709 as of June 30, 2014. B. Defined Benefit Plans The City participates in three defined benefit pension plans: City of Dover Police Pension Plan (closed), City of Dover General Employee Pension Plan (closed), and State of Delaware County and Municipal Police Pension Plan. The City of Dover Police Pension Plan, a single employee defined benefit plan, covers all uniformed police officers hired prior to September 1, 1982. The City of Dover General Employee Pension Plan, a single employer defined benefit plan, covers all full- time permanent employees, other than police officers. The State of Delaware County and Municipal Police Pension Plan, a multi-employer cost sharing defined benefit plan, covers all uniformed police officers hired on or after September 1, 1982. The City makes employer contributions to all three plans. The City holds on behalf of the Pension Boards of Trustees the assets of the two single-employer defined benefit plans and, accordingly, is required to prepare pension trust fund financial statements using the accrual basis of accounting. Investments are reported at fair value based on quoted market prices. Receivables and payables represent year end accruals of short-term receipts or charges. The administration of plan assets for both the Police Pension Plan and the General Employee Pension Plan is conducted by the Pension Boards as described in the subsequent disclosures. Separate pension fund financial statements for each plan have not been issued; accordingly, they are presented as required by GASB Statement No. 34, as follows: 80

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements The City of Dover, Delaware Combining Statement of Pension Trust Fund Net Position June 30, 2014 Police General Pension Pension Totals ASSETS: Cash and cash equivalents $ 559,525 $ 1,589,783 $ 2,149,308 Investments at fair value - Mutual Funds 11,699,622 32,839,160 44,538,782 Receivables 20,200 - 20,200 Total Assets 12,279,347 34,428,943 46,708,290 LIABILITIES: Accounts Payable - (3,334) (3,334) Net position held in trust for pension benefits $ 12,279,347 $ 34,425,609 $ 46,704,956 Investment Policy Statements are adopted by the Board of Trustees for each pension plan. At the current time, both plans have the same category allocations as follows: Target Category Allocation Percentage Money Market 4.50% Short Term Bonds 5.50% Inflation Protected Bonds 6.00% Intermediate Term Bonds 8.00% Long Term Bonds 9.00% High Yield Bond 6.00% Large Cap Value 10.00% Large Cap Growth 11.00% Mid Cap 5.00% Small Cap 7.00% Real Estate Investment 8.00% Foreign Equity 10.00% Emerging Markets 10.00% 100.00% 81

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements The City of Dover, Delaware Combining Statement of Changes in Pension Trust Fund Net Pension For the Year Ended June 30, 2014 Police General Pension Pension Totals Additions Net investment income $ 1,568,176 $ 4,148,960 $ 5,717,136 City's contribution - payroll based - 278,036 278,036 City's contribution - lump sum 689,400 3,194,700 3,884,100 Employee contribution - 211,550 211,550 State contributions 471,461 - 471,461 Other 68,502 - 68,502 Total Additions to Net Position 2,797,539 7,833,246 10,630,785 Deductions Benefit payments 1,548,151 3,633,818 5,181,969 General administration 5,247 16,296 21,543 Refund of pension contribution - 20,376 20,376 Total Deductions From Net Position 1,553,398 3,670,490 5,223,888 Change in net position 1,244,141 4,162,756 5,406,897 Net Position - Beginning 11,035,206 30,262,853 41,298,059 Net Position - Ending $ 12,279,347 $ 34,425,609 $ 46,704,956 Plan member contributions are recognized in the period in which the contributions are due. Employer contributions to each plan are recognized when due, pursuant to formal commitments, to provide contributions. Benefits or refunds are recognized when due and payable in accordance with the terms of each plan. Investment management and consultant fees are paid from the Pension Trusts Funds. All actuarial costs are paid from other City funds. The State contributes to the City of Dover certain grants on behalf of law enforcement programs. The State assesses a .25% surcharge on insurance policies issued in the State. Each year this amount is allocated to the municipalities in Delaware in direct ratio to the number of officers employed. The State also provides 75% for the annual cost of living increase (COLA) granted to police retirees on January 1 each year. The Police Pension Ordinance provides for these grants to be transferred to the Police Pension Trust. These amounts are included as grants received revenue and Public Safety and Law Enforcement expenditures in the General Fund. Total eligible full-time employee wages covered by the two active defined benefit pension plans were $13.4 million this fiscal year. i. City of Dover Police Pension Plan Plan Description This contributory pension plan began on January 1, 1970 under the authority of the City Code, Chapter 62, Article III, Pension Plan, Section 62-71 through 62-84. The contribution and funding requirements of the plan are established by the City and may be amended by the City Council. It is a closed plan. The last active employee retired June 29, 2006. An officer’s pension right is vested upon the completion of 15 years of continuous service. As of June 30, 2014, there are 48 82

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements retirees and beneficiaries receiving benefits. Fully vested employees who have completed 20 to 25 years of continuous service are entitled to annual benefits equal to 2 ½% of their average earnings for each year of continuous service. The maximum benefit is 62 ½% of average earnings. If a participant terminates after completing 15 years of service, the participant will be eligible for a deferred benefit commencing at age 60 with a benefit accrued at the date of termination. In place of this vesting, participants may elect to receive their accumulated contributions. Disability benefits are paid to a participant who is totally or partially disabled in the performance of his or her duties. The total duty-connected disability benefit is payable monthly and equal to 75% of the monthly rate of earning at the time of disability. The partial duty-connected disability benefit is the accrued benefit at the date of disability if not less than 50% of average earnings. Disability benefits cease if the participant recovers or dies. If the disabled participant reaches his normal retirement date, the benefit is reduced by one-third. Survivor’s benefits are payable monthly in an amount equal to 75% of the participant’s rate of earnings, for a duty related death. Survivor’s benefits are payable monthly in an amount not to exceed 25% of the participant’s rate of earnings, for a non-duty related death, if the participant has completed 10 years of service. If a retired participant dies, his or her spouse receives 50% of the benefit. All benefits under the plan, including survivor’s benefits, are increased 2% per annum. There have been no changes in benefits during the valuation period by City Council. Plan Administration Management of the plan investments are fully vested with the City of Dover Police Pension Board as established in the City Code, which consists of three elected by plan members, two Council members appointed by the Council President, the Chief of Police, and the City Manager. The City Controller/Treasurer serves as an ex-officio member. Milliman of Albany, New York provides asset management advisory and consulting services to the Board. Funding Policy The City intends to continue to fund the actuarial determined contributions (ADC) as provided for in the actuarial valuation. The current year contributions are based on the parameters set forth in the actuarial valuation report as of June 30, 2014 in accordance with GASB Statement 67. The funding may be impacted by differences in actual experience and the actuarial assumptions. The employer contributions are considered by the actuaries in their determination of the actuarial determined contribution. In addition, the City has adopted in its financial policies to have any surplus in the budget balances of the prior year be transferred to the retirement benefit plans to further reduce the net pension obligation. The ADC conforms to the entry age normal cost method as defined in GASB Statement 67. The City has interim valuations completed each year between the required biennial valuations to monitor the progress of the net pension obligation. The City’s actuary is Milliman of Wayne, Pennsylvania. The calculation of the net pension asset for June 30, 2014 is presented below. Governmental Activities Actuarially determined contribution $ 1,155,110 Employer contributions (1,229,363) Contribution deficiency/(excess) (74,253) Net pension (asset) at beginning of year (106,065) Net pension (asset) at end of year $ (180,318) 83

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements Net Pension Liability As of June 30, 2014, the most recent measurement date for the actuarial valuation, the plan was 62.97% funded. The total pension liability for benefits was $19.5 million, and the fiduciary net position was $12.3 million, resulting in a net pension liability (NPL) of $7.2 million for the primary government. There are no active officers, therefore there is no covered payroll or ratio of the net pension liability to cover payroll. There have been no changes in actuarial assumptions or methods since the prior valuation. The following presents the net pension liability of the City of Dover Police Pension Plan, calculated using the discount rate of 7.00%, as well as what the plan’s net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.00%) or 1 percentage point higher (8.00%) than the current rate: 1% Decrease Current Discount 1% Increase (6.00%) Rate 7.00% (8.00%) Net pension liability $ 9,203,000 $ 7,220,000 $ 5,539,000 The schedule of changes in the net pension liability, schedule of City contributions, and a schedule of investment returns are presented as Required Supplementary Information (RSI) following the notes to the financial statements. For the year ended June 30, 2014, the annual money weighted rate of return on the general employee pension plan investments, net of investment expense was 14.76%. The money weighted rate of return considers the changing amounts actually invested during a period and weights the amount of pension plan investments by proportion of time they are available to earn a return during that period. Actuarial Methods and Significant Assumptions Valuation date July 1, 2012 Actuarial cost method Entry Age Normal Amortization method Level dollar of projected payroll Remaining amortization period 11 years Amortization period Closed Asset valuation method Current market value Actuarial assumptions: Investment rate of return 7.0% (See supplementary schedule in RSI) Discount rate 7.0% Projected salary increases none, no remaining active participants Includes inflation at none, no remaining active participants Automatic Cost of Living (retirees) 2.0% Mortality RP-2000 Healthy Annuitant Mortality Table The July 1, 2012 valuation date determines the June 30, 2013 and June 30, 2014 fiscal year end contributions. 84

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements ii. City of Dover General Employee Pension Plan Plan Description The City of Dover General Employee Pension Plan started on July 1, 1967, under the authority of the City Council, Municipal Code, Chapter 2, Article IV, Division 7, General Employee Pension Plan, Sections 2-321 through 2-370, and was made contributory on July 1, 1983. Employees contribute 3.5% of gross salary, exclusive of unscheduled overtime. An employee’s pension right is vested upon completion of 10 years of continuous service. At the present time, 120 employees and 205 retirees participate in the plan, while 112 employees are enrolled in the defined contribution plan, which began July 1, 2000. Current membership in the General Employee Pension Plan as of June 30, 2014, is comprised of the following: Retired and beneficiaries currently receiving benefits 205 Active employees Fully Vested 80 Non-Vested 40 Deferred vested 15 The percentage of covered payroll which employees contribute is stated in the City Code, and is considered by the actuaries in their determination of the actuarial determined contribution for service cost. For the year ended June 30, 2014, gross payroll earnings of $6.0 million were reported to and covered by this plan. An employee hired before May 1, 1994 is eligible for normal retirement benefits under this plan: when he/she attains the age of 65 with 10 years of continuous service. This same employee is eligible for early retirement when he/she attains the age of 50 with 20 years of continuous service or has completed 25 years of service. Employees hired on or after May 1, 1994 who attained age 55 and whose attained age plus years of continuous service is equal to or greater than 80 are eligible for early-unreduced retirement benefits under this plan. The monthly benefits are 1/50 of the average actual monthly earnings multiplied by years and months of credited service upon retirement (highest 36 consecutive months in his/her final 10 years of continuous service). The monthly benefit shall not be less than $200 per month. Benefits are paid for the lifetime of the participant. Upon the death of the participant, 50% of the payments to which the participant was or would have been entitled shall be made to his eligible survivor. An employee may also take an early-reduced retirement on any date following the attainment of age 55 and the completion of 10 years of continuous service. However, the early retirement benefit is calculated in the same manner as the normal retirement benefit, at a reduced rate of one-half percent for each month computed from the date of early retirement to age 65 years. Survivor's benefits are payable to eligible survivors of a participant who dies after completing 10 years of continuous service. The amount of the death benefit is equal to 50% of the retirement benefit the participant would have received had he retired the day before he died. A participant is vested in the pension plan after completing 10 years of continuous service, with survivor benefits commencing when the employee would have attained the age of 65. The benefit is calculated using the normal retirement benefit formula and service at date of termination. If an employee terminated before becoming vested in the plan, they are eligible to withdraw this total contribution with interest compounded annually. On May 1, 1994, a deferred compensation option was offered to employees in lieu of participation in the General Employee Pension Plan, and at that time 41 employees elected to switch to the deferred compensation plan. (See Note 17 – Deferred Compensation Plan) 85

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements Effective September 29, 2009 the City Council voted to close the General Employee’s Pension plan to new hires. There have been no changes in benefits during the valuation period by City Council. Plan Administration Management of the plan investments are fully vested with the City of Dover Employees” Police Pension Board as established in the City Code, which consists of three elected by plan members, two Council members appointed by the Council President, the City Controller/Treasurer, and the City Manager. The City Controller/Treasurer serves as an ex-officio member. Milliman of Albany, New York provides asset management advisory and consulting services to the Board. Funding Policy The City intends to fund the actuarial determined contributions (ADC) as provided for in the actuarial valuation. The City uses the percentage of payroll determined by the actuary for its contributions. The current year contributions are based on the parameters set forth in the actuarial valuation report as of June 30, 2014 in accordance with GASB Statement 67. The funding may be impacted by differences in actual experience and the actuarial assumptions. The employer contributions are considered by the actuaries in their determination of the actuarial determined contribution. In addition, the City has adopted in its financial policies to have any surplus in the budget balances of the prior year be transferred to the retirement benefit plans to further reduce the net pension obligation. The ADC conforms to the entry age normal cost method as defined in GASB Statement 67. The City has interim valuations completed each year between the required biennial valuations to monitor the progress of the net pension obligation. The City’s actuary is Milliman of Wayne, Pennsylvania. The calculation of the net pension asset for June 30, 2014 is presented below. Water/ Governmental Wastewater Electric Fund Total Activities Fund Activities Activities Actuarially determined contribution $ 2,628,694 $ 1,746,129 $ 243,216 $ 639,349 Employer contributions (3,472,736) (1,711,281) (368,565) (1,392,890) Contribution deficiency/(excess) (844,042) 34,848 (125,349) (753,541) Net pension (asset) at beginning of year (6,914,326) (191,820) (479,537) (6,242,969) Net pension (asset) at end of year $ (7,758,368) $ (156,972) $ (604,886) $ (6,996,510) Net Pension Liability As of June 30, 2014, the most recent measurement date for the actuarial valuation, the plan was 60.91% funded. The total pension liability for benefits was $56.5 million, and the fiduciary net position was $34.4 million, resulting in a net pension liability (NPL) of $22.1 million for the primary government. The covered payroll (annual payroll of active employees covered by the plan) was $6 million, and the ratio of the NPL to the covered payroll was 370.03%. There have been no changes in actuarial assumptions or methods since the prior valuation. The following presents the net pension liability of the City of Dover General Employee Pension Plan, calculated using the discount rate of 7.00%, as well as what the plan’s net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.00%) or 1 percentage point higher (8.00%) than the current rate: 86

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements 1% Decrease Current Discount 1% Increase (6.00%) Rate 7.00% (8.00%) Net pension liability $ 29,114,000 $ 22,093,000 $ 16,260,000 The City’s amortization period for fiscal year 2014 was 21 years of a 30 year amortization period. Due to the additional City contributions over the past three years, the actuaries have changed the amortization period to 15 years effective fiscal year 2015. The schedule of changes in the net pension liability, schedule of City contributions, and a schedule of investment returns are presented as Required Supplementary Information (RSI) following the notes to the financial statements. For the year ended June 30, 2014, the annual money weighted rate of return on the general employee pension plan investments, net of investment expense was 13.84%. The money weighted rate of return considers the changing amounts actually invested during a period and weights the amount of pension plan investments by proportion of time they are available to earn a return during that period. Actuarial Methods and Significant Assumptions Valuation date July 1, 2012 Actuarial cost method Aggregate entry age normal Amortization method Level dollar of projected payroll Remaining amortization period 15 years Amortization period Closed Asset valuation method Smoothes gains and losses over a 5-year period Actuarial Assumptions: Investment rate of return 7.0% (See supplementary schedule in RSI) Discount rate 7.0% Projected salary increases 4.0% Includes inflation at 3.5% Mortality RP-2000 Healthy Annuitant Mortality Table The July 1, 2012 valuation date determines the June 30, 2013 and June 30, 2014 fiscal year end contributions. iii. State of Delaware Police Pension Plan The City participates in the State of Delaware “County and Municipal Police Pension Plan” for uniformed police officers whose employment with the City started on or after September 1, 1982 under the authority of the City Code, Chapter 62, Article III, Pension Plan, Section 62-71. This is a cost–sharing multiple-employer defined benefit pension plan. The State of Delaware enacted legislation to provide for the plan and is responsible for setting benefits, contributions and amending plan provisions. This is a contributory plan with the employee contributing 7% of gross salary, exclusive of overtime. For the year ended June 30, 2014, $6.4 million in payroll earnings were reported to and covered by this plan. The City’s contribution percentages were 14.53%, 14.75% and 15.52% for the fiscal years ended June 30, 2012, 2013 and 2014, respectively. The City’s contributions to the plan for years ended June 30, 2012, 2013 and 2014 were $940,562, $936,894 and $990,588 respectively and were equal to the required contributions for each year. These contributions cover the City’s total liability for funding, as determined by the State of Delaware’s actuary. 87

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Notes to Financial Statements The pension plan is managed by the State of Delaware Board of Pension Trustees. The Comprehensive Annual Financial Report of the Delaware Public Employees Retirement System can be obtained from the Office of Pensions, 680 Silver Lake Boulevard, Dover, Delaware, 19904-2402 or at www.delawarepensions.com. As of June 30, 2014 city membership in this plan is comprised of the following: Retired and beneficiaries currently receiving benefits 40 Active employees: Fully Vested 5 years 73 Non-Vested 19 The State of Delaware County and Municipal Police Pension Plan provides benefits equal to 2.5% of final average compensation multiplied by years of service up to 20 years inclusive, plus 3.5% of final average compensation multiplied by years of service above 20 years. Vesting occurs after five years of credited service. Retirement is at age 62 with five years of service; age plus credited service (but not less than 10 years) equals 75; or 20 years of credited service. Disability benefits paid to a participant who is totally disabled in the performance of duty are 75% of final average compensation plus 10% for each dependent not to exceed 25% for all dependents. Partial disability benefits for duty-related or ordinary disability are calculated the same as a service pension (subject to maximum and minimum limitations). If a retired participant dies, the eligible survivor receives 50% of the monthly benefit. If an active employee dies, the survivor receives 50% of the monthly benefit that the employee would have received at age 62. Assets of the plan are managed by investment firms approved by the State Pension Board. Details are available from the State Pension Office, Dover, Delaware at: www.delawarepensions.com. 88

FINANCIAL SECTION PART D REQUIRED SUPPLEMENTARY INFORMATION

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Required Supplementary Information – Part D Services to Our Residents and Customers Animal Control Enforcement Beautification Building Bulk Trash Collection Elections Community Development/Housing Community Policing Economic Development Electricity Emergency Preparedness Fire Protection Inspections & Code Enforcement Leaf Collection Library Parks Planning & Zoning Police Protection Recreation Snow Removal Street Maintenance/Cleaning Trash Collection Tree Maintenance & Management Water/Sewage Service 90

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Required Supplementary Information – Part D CITY OF DOVER GENERAL FUND Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (Non-GAAP Basis) For the Year Ended June 30, 2014 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) Beginning Balance - Working Capital $ 3,455,200 $ 4,219,800 $ 4,219,831 $ 31 REVENUES: Fines & Police Revenue 606,000 510,600 590,287 79,687 911 Fee 60,000 63,300 63,337 37 Interest Earnings 75,000 40,000 28,950 (11,050) Library Revenues - General 66,600 70,500 68,190 (2,310) Library Revenues - County Reimbursement 400,000 460,000 430,363 (29,637) Business Licenses 1,460,000 1,460,000 1,494,315 34,315 Permits & Other Licenses 1,167,500 1,332,500 1,597,262 264,762 Miscellaneous Revenues 63,300 53,100 57,041 3,941 Police Extra Duty Fees 650,000 650,000 562,854 (87,146) Property Taxes 11,120,000 11,046,000 11,044,429 (1,571) Bid Revenue 49,500 49,500 50,050 550 Recreations Revenue 133,000 148,800 151,925 3,125 Franchise Fees 606,200 636,000 648,345 12,345 Transfer Tax 1,315,500 1,393,000 1,544,084 151,084 Trash Fees 2,676,500 2,595,600 2,595,648 48 Garrison Farm Rent 118,500 118,500 92,956 (25,544) Court of Chancery Fees 863,200 1,002,200 1,034,460 32,260 Intrafund Service Receipts Water/Wastewater 1,134,900 1,360,300 1,218,851 (141,449) Intrafund Service Receipts Electric 3,319,400 3,572,700 3,427,308 (145,392) Grants: Green Energy Grant 98,500 98,500 98,500 - Miscellaneous Grants 25,000 25,000 1,000 (24,000) Police Pension Grant 500,000 500,000 471,461 (28,539) Transfer from Police Grant Funds 110,000 126,800 80,212 (46,588) Transfer from Municipal Street Aid 527,400 663,900 664,866 966 Transfer from Civil Traffic Penalties 600,000 368,400 357,531 (10,869) Transfer from Verizon, Contingency and CI Reserves 32,000 282,000 275,968 (6,032) Transfer from Water/Wastewater Fund 500,000 500,000 500,000 - Transfer from Electric Fund 8,000,000 8,000,000 8,000,000 - Total Revenues 36,278,000 37,127,200 37,150,193 22,993 TOTAL BEGINNING BALANCE & REVENUES $ 39,733,200 $ 41,347,000 $ 41,370,024 $ 23,024 (continued) 91

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Required Supplementary Information – Part D (continued) VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) EXPENDITURES: Tax Assessor $ 198,300 $ 208,400 $ 209,395 $ (995) Fire 692,100 741,600 673,464 68,136 Library 1,330,400 1,336,900 1,324,178 12,722 Recreation 708,200 717,200 677,534 39,666 Planning Commission 444,800 422,600 422,085 515 Public Inspections 540,300 695,200 660,580 34,620 Life Safety 468,200 491,400 519,875 (28,475) Code Enforcement 377,100 443,000 412,830 30,170 Economic Development 215,200 215,200 213,889 1,311 Police 14,331,800 15,123,600 14,907,683 215,917 Streets 603,700 660,300 641,167 19,133 Sanitation 2,153,800 2,253,500 2,156,228 97,272 Allocated Expenditures: Human Resources 334,300 393,100 363,064 30,036 Customer Services 1,109,400 1,232,200 1,201,976 30,224 City Manager 457,300 460,000 533,336 (73,336) Information Technology 660,500 740,000 716,217 23,783 Finance 906,500 980,000 910,724 69,276 Public Services-Administration 425,800 513,100 432,425 80,675 Facilities Management 632,600 689,100 634,315 54,785 Central Services 517,600 559,400 521,148 38,252 Vehicle Maintenance 720,700 770,900 780,084 (9,184) City Clerk 334,400 371,700 367,809 3,891 Mayor 83,300 83,300 75,380 7,920 Council 107,800 107,800 99,829 7,971 Grounds Maintenance 948,500 1,160,700 1,031,134 129,566 Insurance 658,900 658,900 655,998 2,902 Contribution to Downtown Dover Partnership 162,400 162,400 162,400 - Tree Grant Expense 25,000 25,000 - 25,000 Other Employment Expenses 400,000 - - - Retiree Benefits 1,636,500 1,636,500 1,636,500 - Subtotal 32,185,400 33,853,000 32,941,247 911,753 Debt Service - Principal and Interest 557,300 557,300 552,051 5,249 Transfer to Capital Fund for Projects 1,278,300 1,448,800 1,448,800 - Transfer to Police Pension Fund 500,000 500,000 471,461 28,539 Transfer to Uncollectibles Trash and Other 10,000 10,000 10,000 - Appropriation to Police Pension Fund 307,400 689,400 689,400 - Appropriation to Pension Fund 1,159,100 121,000 121,000 - Street Lights 836,000 774,500 774,533 (33) Total Expenditures 36,833,500 37,954,000 37,008,492 945,508 Budget Balance - Working Capital 2,899,700 3,393,000 4,361,532 (968,532) Total Budget Balance & Expenditures $ 39,733,200 $ 41,347,000 $ 41,370,024 $ (23,024) Budget Balance - Working Capital $ 4,361,532 Perspective and GAAP (Non-GAAP) Differences: Reserve for Encumbrances (37,377) Fair value of investment adjustment (13,851) Deferred Revenues - Non-spendable (688,935) Inventory & Prepaids - Non-spendable (186,290) Unassigned Fund Balance $ 3,435,079 92

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Required Supplementary Information – Part D NOTES TO REQUIRED SUPPLEMENTARY INFORMATION 1. GOVERNMENTAL BUDGETS A. Budgetary Basis of Accounting The City prepares its budget for the General Fund revenue on a modified accrual basis. The expenditures are accounted for when the purchase orders are issued. Encumbrances are established when purchase orders are issued and accounted for as a reservation of fund balance at year-end. The budget is amended in the subsequent year for the outstanding encumbrances of the prior year. The modified accrual basis of accounting is used for the fund financial statements. The City considers the beginning fund balance an item of revenue for budgetary purposes. General Fund actual revenues were higher than the final budget by $22,993 with increases in police fines, building permits, business licenses, transfer taxes and Court of Chancery fees. The major source of decrease in revenues was attributed to the intrafund service fees related to attrition and retirements thus reducing personnel cost in the proprietary funds. Additional decreases were attributed to police extra duty fees, grant receipts, and transfers from special revenue funds. Expenditures were lower than budget by $945,508 across several functions as a result of personnel reductions through attrition and retirements. The City Manager expenditures exceeded their budget as a result of increased legal fees attributed to collective bargaining negotiations and the formation of an additional collective bargaining unit. The net result is an increase of $968,532 to the General Fund ending fund balance. B. Budget Amendments During this fiscal year, the City Council amended the budget three times. These budget amendments or supplemental appropriation ordinances were primarily for the following purposes: 1. To amend the grant budgets, reserve accounts for the actual results of the prior fiscal year and to re-appropriate budget balances for ongoing capital projects. 2. To amend all carried forward budget balances for the major operating funds from the prior fiscal year, as well as program revenues and expenses based on the analyses provided by a mid-year review. 3. To amend significant changes in program revenues, expenses and ending fund balances based on actual amounts. 2. PENSION PLANS A. Police Pension Plan The net pension liability for this plan is being amortized over 30 years beginning July 1, 1994, 11 of which remain as of July 30, 2014 with payments increased at 3 ½% per year. The amortization period is closed. 93

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Required Supplementary Information – Part D Schedule of Changes in Net Pension Liability, Related Ratios and Investment Returns POLICE PENSION Fiscal Year Ended June 30, 2014 Total Pension Liability Interest on total pension liability $ 1,324,605 Effect of economic/demographic (gains) or losses 25,546 Benefit payments (1,548,151) Net change in total pension liability (198,000) Total pension liability, beginning 19,697,000 Total pension liability, ending (a) $ 19,499,000 Fiduciary Net Position Employer contributions $ 1,229,363 Investment income net of investment expenses 1,583,346 Benefit payments (1,548,151) Administrative expenses (20,417) Net change in plan fiduciary net position 1,244,141 Fiduciary net position, beginning 11,035,206 Fiduciary net position, ending (b) $ 12,279,347 Net pension liability, ending = (a) - (b) $ 7,219,653 Fiduciary net position as a % of total pension liability 62.97% Covered payroll $ - Net pension liability as a % of covered payroll N/A Annual money-weighted rate of return, net of investment expense 14.76% This schedule is presented to illustrate the requirement to show information for 10 years. However, recalculations of prior years are not required, and if prior years are not reported in accordance with the current GASB standards, they should not be reported. 94

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Required Supplementary Information – Part D Police Pension Fund Required Supplementary Information Schedule of Employer Contributions Fiscal Year Actuarially Actual Contribution Contribution as Ended Determined Employer Deficiency Covered a Percentage of June 30 Contribution Contribution (Excess) Payroll Covered Payroll 2005 $ 533,486 $ 852,135 $ (318,649) $ - N/A 2006 560,638 717,617 (156,979) - N/A 2007 485,055 746,985 (261,930) - N/A 2008 358,807 721,202 (362,395) - N/A 2009 520,505 725,492 (204,987) - N/A 2010 786,436 496,587 289,849 - N/A 2011 1,082,956 633,636 449,320 - N/A 2012 979,132 668,274 310,858 - N/A 2013 1,155,796 1,074,599 81,197 - N/A 2014 1,155,110 1,229,363 (74,253) - N/A Actuarial Methods and Significant Assumptions Valuation date July 1, 2012 Actuarial cost method Entry Age Normal Amortization method Level dollar of projected payroll Remaining amortization period 11 years Amortization period Closed Asset valuation method Current market value Actuarial assumptions: Investment rate of return 7.0% (See supplementary schedule in RSI) Discount rate 7.0% Projected salary increases none, no remaining active participants Includes inflation at none, no remaining active participants Automatic Cost of Living (retirees) 2.0% Mortality RP-2000 Healthy Annuitant Mortality Table The July 1, 2012 valuation date determines the June 30, 2013 and June 30, 2014 fiscal year end contributions. 95

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Required Supplementary Information – Part D B. Employee Pension Plan The net pension liability for this plan was being amortized over 25 years beginning July 1, 2010, 21 of which remained as of July 30, 2014 with payments increased at 3 ½% per year. Investment gains and losses are spread over five years. Upon completion of the GASB 67 Disclosure report, the actuary is recommending a 15 year amortization schedule effective fiscal year 2015. The amortization period is closed. Schedule of Changes in Net Pension Liability, Related Ratios and Investment Returns GENERAL PENSION Fiscal Year Ended June 30, 2014 Total Pension Liability Service cost $ 484,166 Interest on total pension liability 3,809,755 Effect of economic/demographic (gains) or losses 111,273 Benefit payments (3,654,194) Net change in total pension liability 751,000 Total pension liability, beginning 55,768,000 Total pension liability, ending (a) $ 56,519,000 Fiduciary Net Position Employer contributions $ 3,472,736 Member contributions 211,550 Investment income net of investment expenses 4,153,081 Benefit payments (3,654,194) Administrative expenses (20,417) Net change in plan fiduciary net position 4,162,756 Fiduciary net position, beginning 30,262,853 Fiduciary net position, ending (b) $ 34,425,609 Net pension liability, ending = (a) - (b) $ 22,093,391 Fiduciary net position as a % of total pension liability 60.91% Covered payroll $ 5,970,703 Net pension liability as a % of covered payroll 370.03% Annual money-weighted rate of return, net of investment expense 13.84% This schedule is presented to illustrate the requirement to show information for 10 years. However, recalculations of prior years are not required, and if prior years are not reported in accordance with the current GASB standards, they should not be reported. 96

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Required Supplementary Information – Part D General Employee Pension Plan Required Supplementary Information Schedule of Employer Contributions Fiscal Year Actuarially Actual Contribution Contribution as Ended Determined Employer Deficiency Covered a Percentage of June 30 Contribution Contribution (Excess) Payroll Covered Payroll 2005 $ 1,726,989 $ 1,566,845 $ 160,144 $ 7,320,938 21.40% 2006 2,022,614 1,739,448 283,166 7,380,629 23.57% 2007 2,231,594 2,767,177 (535,583) 7,612,121 36.35% 2008 2,269,802 2,908,080 (638,278) 8,006,103 36.32% 2009 2,356,529 2,491,393 (134,864) 8,716,361 28.58% 2010 2,564,767 2,270,623 294,144 8,786,981 25.84% 2011 3,149,493 3,347,728 (198,235) 8,256,751 40.55% 2012 3,130,022 3,142,951 (12,929) 7,974,057 39.41% 2013 3,217,964 9,788,571 (6,570,607) 7,076,322 138.33% 2014 2,628,694 3,472,736 (844,042) 5,970,703 58.16% Actuarial Methods and Significant Assumptions Valuation date July 1, 2012 Actuarial cost method Aggregate entry age normal Amortization method Level dollar of projected payroll Remaining amortization period 15 years Amortization period Closed Asset valuation method Smooth gains and losses over a 5-year period Actuarial Assumptions: Investment rate of return 7.0% (See supplementary schedule in RSI) Discount rate 7.0% Projected salary increases 4.0% Includes inflation at 3.5% Mortality RP-2000 Healthy Annuitant Mortality Table The July 1, 2012 valuation date determines the June 30, 2013 and June 30, 2014 fiscal year end contributions. 3. OTHER POSTEMPLOYMENT PLAN The following information presents additional information related to funding status and progress of Other Postemployment Benefits. It is intended to help readers assess the individual plans’ funding status on a going-concern basis and assess progress made in accumulating sufficient assets to pay benefits when due. The amount shown below as actuarial accrued liability is a measure of the difference between the actuarial present value of future plan benefits, and the actuarial present value of future normal cost. 97

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Required Supplementary Information – Part D OPEB Trust Schedule of Funding Status and Progress (3) (6) Unfunded UAAL (2) Actuarial as a (1) Actuarial Accrued (4) % of Actuarial Actuarial Accrued Liabilities Funded (5) Covered Valuation Value of Liability (UAAL) Ratio Covered Payroll Date Assets (AAL) (2) – (1) (1)/(2) Payroll (3)/(5) 7/1/2008 $ - $ 64,297,063 $ 64,297,063 0.0% $ 18,162,177 354% 7/1/2009 4,761,141 64,812,543 60,051,402 7.3% 18,797,853 319% 7/1/2010 4,882,375 83,518,121 78,635,746 5.8% 18,292,104 430% 7/1/2011 7,047,987 83,441,000 76,393,013 8.4% 18,454,162 414% 7/1/2012 10,913,172 71,021,484 60,108,312 15.4% 17,335,618 347% 7/2/2012 13,627,223 70,414,000 56,786,777 19.4% 17,521,727 324% Valuation Date July 1, 2012 Actuarial Cost Method Projected Unit Credit Amortization Method Level Dollar Amount Open Remaining Amortization Period 30 years (open) Asset Valuation Method Current Market Value Actuarial Assumptions: Investment Rate of Return 7.00% Discount Rate 5.60% Ultimate Rate of Medical inflation Varies between 5.00% and 5.70% Initial Rate of Medical Inflation 7.00%< 65 and 6.60% >=65 Getzen Model version 12.2 with real GDP growth Health Care Cost Trend assumption 1.8% RP-2000 Healthy Annuitant Mortality Table projected on Mortality a generational basis using Scale AA 98

FINANCIAL SECTION PART E SUPPLEMENTARY INFORMATION - Combined Fund Statements - Budgetary Schedules

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2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E FINANCIAL STATEMENTS GENERAL FUND COMBINING STATEMENTS The Governmental Capital Projects Fund is combined with the General Fund in the Basic Financial Statements. The combining statements are presented in the supplementary information. The budgetary comparison for the Governmental Capital Projects Fund has its own separate budget and is presented in this section to show legal compliance. The perspective difference between the basis of budgeting and GAAP is explained in the reconciliation of the basis of budgeting to GAAP. 101

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E The City of Dover Combining General Fund Balance Sheet June 30, 2014 General Total General Capital Projects General Fund Fund Funds Assets: Cash and Cash Equivalents $ 2,708,632 $ 305,148 $ 3,013,780 Restricted Cash and Cash Equivalents 40 - 40 Investments 1,952,150 3,353,199 5,305,349 Restricted Investments 18,292 - 18,292 Receivables, net Accounts 2,007,898 - 2,007,898 Taxes 177,638 - 177,638 Due from Other Funds 794,727 75,039 869,766 Prepaid Items 42,999 - 42,999 Inventory, at Cost 143,291 - 143,291 Total Assets $ 7,845,667 $ 3,733,386 $ 11,579,053 Liabilities: Accounts Payable $ 970,852 $ 305,067 $ 1,275,919 Deferred Revenue 856,931 57,825 914,756 Due to Other Funds 870,340 - 870,340 Other 169,933 - 169,933 Total Liabilities 2,868,056 362,892 3,230,948 Deferred Inflows of Resources: Unavailable revenue 688,935 - 688,935 Total Deferred Inflows of Resources 688,935 - 688,935 Fund Balances: Non-Spendable Inventory and Prepaids 186,290 - 186,290 Library Endowment 5,000 - 5,000 Patronage Stock 16,594 - 16,594 Restricted Library Endowment 1,698 - 1,698 Verizon Cable Franchise 127,778 - 127,778 Committed Contingency 467,269 - 467,269 Parkland Reserve - 218,654 218,654 Encumbrances 37,377 - 37,377 Assigned Police Investigations 11,591 - 11,591 Capital Assets - 3,151,840 3,151,840 Unassigned 3,435,079 - 3,435,079 Total Fund Balances 4,288,676 3,370,494 7,659,170 Total Liabilities and Fund Balances $ 7,845,667 $ 3,733,386 $ 11,579,053 102

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E The City of Dover Combining Statement of Revenues, Expenditures and Changes in Fund Balances of the General Fund For the Year Ended June 30, 2014 General Total General Capital Projects General Fund Fund Funds Revenues Fines $ 653,625 $ - $ 653,625 Library Revenue- General 68,190 - 68,190 Library Revenue County Reimbursement 430,363 - 430,363 Licenses and Permits 3,091,577 - 3,091,577 Sanitation Fees and Rebates 2,595,648 - 2,595,648 Miscellaneous Services 1,789,085 315,347 2,104,432 Property Taxes 11,094,479 - 11,094,479 Grants Received 570,961 143,856 714,817 Court of Chancery Fees 1,034,460 - 1,034,460 Investment Income 28,950 14,245 43,195 Total Revenues 21,357,338 473,448 21,830,786 Expenditures Current: General Government 1,271,521 - 1,271,521 Library Services 1,324,178 110,438 1,434,616 Public Safety and Law Enforcement 18,335,293 611,480 18,946,773 Public Works 1,520,904 48,044 1,568,948 Recreational Services 677,534 5,829 683,363 Streets and Sanitation Services 2,797,395 1,836,697 4,634,092 Financial Administration 1,002,539 1,002,539 Garage and Stores 415,593 - 415,593 Insurance 272,895 - 272,895 Retiree Health Care 1,636,500 - 1,636,500 Employee Pension 121,000 - 121,000 Community and Economic Development 211,595 - 211,595 Street Lights 774,533 - 774,533 Debt Service: Principal Retirement 429,238 - 429,238 Interest and Fiscal Charges 122,812 - 122,812 Total Expenditures 30,913,530 2,612,488 33,526,018 Excess (deficiency) of Revenues over Expenditures (9,556,192) (2,139,040) (11,695,232) Other Financing Sources and Uses Reserve Transfers (25,140) (25,140) Interfund Transfers 9,697,893 1,760,552 11,458,445 Total other Financing Sources and Uses 9,697,893 1,735,412 11,433,305 Net Change in Fund Balances 141,701 (403,628) (261,927) Fund Balances at Beginning of Year 4,219,831 3,058,253 7,278,084 Fund Balances at End of Year $ 4,361,532 $ 2,654,625 $ 7,016,157 Perspective and GAAP (Non-GAAP) Differences: Fair Value of Investment Adjustment $ (13,851) $ (23,771) $ (37,622) Deferred Revenues - Non-spendable (688,935) - (688,935) Inventory & Prepaids - Non-spendable (186,290) - (186,290) Encumbrance Reserve (37,377) - (37,377) Capital Asset - Assigned - (2,630,854) (2,630,854) Unassigned Fund Balance $ 3,435,079 $ - $ 3,435,079 103

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E CITY OF DOVER GOVERNMENTAL CAPITAL PROJECTS FUND Schedule of Revenues, Expenditures and Changes in Fund Balances Budget & Actual (Non-GAAP Basis) For the Year Ended June 30, 2014 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) Beginning Balance - Working Capital $ 241,200 $2,801,800 $ 2,801,727 $ (73) Beginning Balance - Library Project (74,700) 256,500 256,526 26 REVENUES: Interest Earnings - - 14,245 14,245 State Grant for Library Project - 150,000 143,856 (6,144) Library Foundation Donations - 5,000 8,250 3,250 State Grant - Recreation 15,000 15,000 - (15,000) Income from Sale of Assets - - 27,815 27,815 Transfer from General Fund for Projects 1,278,300 1,448,800 1,448,800 - Transfer from Parkland Reserve 95,000 80,000 - (80,000) Transfer from Community Transportation Fund - 60,500 60,500 - MSA Capital Contribution - 251,200 251,252 52 Miscellaneous Receipts - 264,800 279,282 14,482 Total Revenues 1,388,300 2,275,300 2,234,000 (41,300) TOTAL BEGINNING BALANCE & REVENUES $ 1,554,800 $ 5,333,600 $ 5,292,253 $ (41,347) EXPENDITURES: Fire $ 238,500 $ 238,500 $ 238,515 $ (15) Grounds Maintenance 50,100 50,100 30,249 19,851 Library - 446,500 110,438 336,062 Police 257,300 342,400 342,125 275 Procurement & Inventory 55,000 55,000 - 55,000 Public Inspections 30,000 30,900 30,840 60 Recreation 95,000 172,000 5,829 166,171 Streets 251,500 3,460,700 1,449,193 2,011,507 Sanitation 402,100 395,600 387,504 8,096 Information Technology 7,000 7,000 - 7,000 Facilities Management 17,800 17,800 17,795 5 Subtotal 1,404,300 5,216,500 2,612,488 2,604,012 Net Loss on Sale of Assets & Garrison Tract Land - - - Transfer to Parkland Reserve - - 14,517 (14,517) Transfer to Capital Asset Reserve - - 10,623 (10,623) Total Expenditures 1,404,300 5,216,500 2,637,628 2,578,872 Budget Balance - Working Capital 150,500 117,100 2,324,129 (2,207,029) Budget Balance - Library Project - - 330,496 (330,496) Budget Balance & Expenditures $ 1,554,800 $ 5,333,600 $ 5,292,253 $ 41,347 Budget Balance - Working Capital $ 2,654,625 Perspective and GAAP (Non-GAAP) Differences: Deferred Revenue - non-spendable Fair value of investment adjustment (23,771) Assigned to Capital assets 520,986 Committed to Parks & Recreation improvements 218,654 Total Fund Balances $ 3,370,494 104

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E FINANCIAL STATEMENTS SPECIAL REVENUE FUNDS Special Revenue Funds include the group of funds classified as grant funds and a Realty Transfer Tax Fund. The proceeds from specific revenue sources are restricted to specified expenditure purposes. The City adopts budgets for selected Special Revenue Funds. Combining and individual statements appear in this section. POLICE GRANTS The City of Dover Police Department receives various grants from the State of Delaware for public and highway safety and the U.S. Department of Justice for local law enforcement. All grant transactions are recorded in this fund. LIBRARY GRANTS The City of Dover Public Library receives various grants from the State of Delaware, Kent County, and the Federal Government. Activities associated with these grants are recorded in this fund. MUNICIPAL STREET AID The State of Delaware has passed legislation to share a portion of Delaware’s motor fuel tax revenue with local municipalities through grants. The amount of the grant the City receives depends on its population and miles of streets maintained. The grant is used for street light expense within the City. CDBG HOUSING GRANTS & NEIGHBORHOOD STABILIZATION PROGRAM The City receives a U.S. Department of Housing and Urban Development Entitlement Grant for the Community Development Block Grant Program. This provides housing to low or moderate- income persons as well as public housing rehabilitation and community policing. Combined with the CDBG Fund is the Neighborhood Stabilization Program (NSP) that provides low interest loans for low to moderate-income families. 105

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E FINANCIAL STATEMENTS SPECIAL REVENUE FUNDS (Continued) GAMES AND HOT SHOT GRANT The City of Dover, in coordination with Aid in Dover, received two grants from the Criminal Justice Council for programs called GAMES and HOT SHOT. These programs provide youth programming for at-risk girls and boys. STATE OF DELAWARE DEPARTMENT OF TRANSPORTATION GRANTS The State of Delaware Department of Transportation grants provide funds for specific street projects in the City. State law provides funds to the State’s elected officials for suburban street aid, which officials can then provide to their districts. The City receives these funds for designated street projects and records all transactions for this fund. SUBSTANCE ABUSE PREVENTION GRANT The State of Delaware General Assembly Grant-In-Aid Program provides funds to implement a substance abuse prevention program for at-risk and/or disadvantaged youths in the City of Dover. ELECTRONIC RED LIGHT SAFETY PROGRAM (ERLSP) The State of Delaware Department of Transportation provides a grant to municipalities that implement the Electronic Red Light Safety Program. Under this program, the City is granted a portion of the fines collected from drivers who are ticketed for running red lights installed with electronic photo identification equipment within the City limits. GARRISON OAK TECHNOLOGY PARK The State of Delaware Economic Development office appropriated funds to the City for infrastructure improvement to the Garrison Oak property. REALTY TRANSFER TAX Delaware Code states that realty transfer tax realized by the City shall be segregated from the general fund and the funds shall be expended solely for the capital and operating costs of public safety services, economic development programs, public works services, capital projects and improvements, infrastructure projects and improvements and debt reduction. 106

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E CITY OF DOVER SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET JUNE 30, 2014 MUNICIPAL CDBG/NSP HOT SHOT STATE SUBSTANCE REALTY POLICE LIBRARY STREET HOUSING AND GAMES D.O.T. ABUSE ERLSP TRANSFER GRANTS GRANTS AID GRANTS GRANT GRANTS PREV. GRANT TAX TOTALS ASSETS: Cash $ 181,106 $ 73,252 $ 75,389 $ 84,563 $ - $ 143,532 $ 82,124 $ 100 $ 10 $ 640,076 Receivables 1,445 - - - 4,335 - - - - 5,780 Prepaid items - - - - - - 2,447 - - 2,447 Due from other governments 4,210 - - 37,298 - - - 37,072 - 78,580 TOTAL ASSETS 186,761 73,252 75,389 121,861 4,335 143,532 84,571 37,172 10 726,883 LIABILITIES AND FUND BALANCE: Liabilities: Vouchers Payable 11,052 28,442 - 35,878 4,335 - 6,658 - - 86,365 Deferred Revenue - - - 38,011 - - - - - 38,011 Due to other funds-charges 3,647 - 75,289 1,464 - - - 37,072 10 117,482 Total Liabilities 14,699 28,442 75,289 75,353 4,335 - 6,658 37,072 10 241,858 Fund Balances: Nonspendable - - - - - - 2,447 - - 2,447 Restricted 172,062 44,810 100 46,508 - 143,532 75,466 100 - 482,578 Total Fund Balances 172,062 44,810 100 46,508 - 143,532 77,913 100 - 485,025 TOTAL LIABILITIES AND FUND BALANCES $ 186,761 $ 73,252 $ 75,389 $ 121,861 $ 4,335 $ 143,532 $ 84,571 $ 37,172 $ 10 $ 726,883 107

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E CITY OF DOVER SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN UNRESERVED FUND BALANCES YEAR ENDED JUNE 30, 2014 MUNICIPAL CDBG/NSP HOT SHOT STATE SUBSTANCE REALTY POLICE LIBRARY STREET HOUSING AND GAMES D.O.T. ABUSE PREV. ERLSP TRANSFER GRANTS GRANTS AID GRANTS GRANT GRANTS GRANT TAX TOTALS REVENUES: Grants received $ 260,306 $ 280,337 $ 663,940 $ 429,834 $ 23,490 $ 998,509 $ 37,167 $ - $ - $ 2,693,583 Recreation revenue - - - - - - 49,144 - - 49,144 Police fines - - - - - - - 357,531 - 357,531 Transfer taxes - - - - - - - - 1,543,626 1,543,626 Investment income (loss) 793 - 720 - - 324 - - 358 2,195 TOTAL REVENUES 261,099 280,337 664,660 429,834 23,490 998,833 86,311 357,531 1,543,984 4,646,079 EXPENDITURES: Program expenditures 184,061 263,366 - 392,063 23,490 1,004,017 49,406 - - 1,916,403 TOTAL EXPENDITURES 184,061 263,366 - 392,063 23,490 1,004,017 49,406 - - 1,916,403 Excess (deficiency) of revenues over (under) expenditures 77,038 16,971 664,660 37,771 - (5,184) 36,905 357,531 1,543,984 2,729,676 OTHER FINANCING SOURCES (USES): Operating transfers-out (80,212) - (916,118) - - (60,500) - (357,531) (1,544,084) (2,958,445) Net Change in fund balances (3,174) 16,971 (251,458) 37,771 - (65,684) 36,905 - (100) (228,769) FUND BALANCE AT BEGINNING OF YEAR 175,236 27,839 251,558 8,737 - 209,216 41,008 100 100 713,794 FUND BALANCE AT END OF YEAR $ 172,062 $ 44,810 $ 100 $ 46,508 $ - $ 143,532 $ 77,913 $ 100 $ - $ 485,025 108

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E CITY OF DOVER POLICE GRANTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN UNRESERVED FUND BALANCE - BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2014 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES: Beginning balance $ 100 $ 175,200 $ 175,236 $ 36 Interest earned - - 793 793 Grants received 413,000 390,500 260,306 (130,194) TOTAL REVENUES & BEGINNING BALANCE 413,100 565,700 436,335 (129,365) EXPENDITURES: Program expenses/supplies 191,000 224,700 125,636 (99,064) Furniture and fixtures - - 2,322 2,322 Telephone/fax 15,000 15,000 16,508 1,508 Training/Conference/Food/Travel 36,000 36,000 17,000 (19,000) Consulting/audit fees 1,000 1,000 833 (167) Contractual services - - 3,887 3,887 Technology equipment 60,000 60,000 17,875 (42,125) TOTAL EXPENDITURES 303,000 336,700 184,061 (152,639) Other financing uses: Operating transfers - out (110,000) (151,800) (80,212) 71,588 BALANCE CARRIED TO NEXT YEAR $ 100 $ 77,200 $ 172,062 $ 94,862 109

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E CITY OF DOVER LIBRARY GRANTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN UNRESERVED FUND BALANCE - BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2014 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES: Beginning balance $ - $ 17,300 $ 27,838 $ 10,538 Grants received: State 270,100 274,100 274,108 8 Grants received: Other - - 4,100 4,100 Grants received: Federal - - 2,130 2,130 TOTAL REVENUES & BEGINNING BALANCE 270,100 291,400 308,176 16,776 EXPENDITURES: Program expenditures/supplies 28,000 28,000 24,165 (3,835) Office Supplies 24,000 24,000 24,000 - Printing/duplicating 8,900 8,900 8,900 - Postage 100 100 42 (58) Books 124,900 128,900 125,323 (3,577) Furniture/Fixtures 2,000 2,000 7,297 5,297 Audio visual supplies 74,000 74,000 67,594 (6,406) Training/conference/food/travel 3,500 3,500 2,832 (668) Office equipment repairs 2,000 2,000 3,213 1,213 Computer hardware 2,700 2,700 (2,700) TOTAL EXPENDITURES 270,100 274,100 263,366 10,734 BALANCE CARRIED TO NEXT YEAR $ - $ 17,300 $ 44,810 $ 27,510 110

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E CITY OF DOVER MUNICIPAL STREET AID FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN UNRESERVED FUND BALANCE-BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2014 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES: Beginning balance $ 100 $ 251,500 $ 251,558 $ 58 State Grant - Operations 527,400 663,900 663,940 40 Interest Earned - - 720 720 TOTAL REVENUES & BEGINNING BALANCE 527,500 915,400 916,218 818 Other financing uses: Operating transfers-out (527,400) (915,300) (916,118) (818) BALANCE CARRIED TO NEXT YEAR $ 100 $ 100 $ 100 $ - 111

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E CITY OF DOVER HOUSING PROGRAMS - CDBG & NSP SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN UNRESERVED FUND BALANCE-BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2014 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES: Beginning balance CDBG $ - $ 2,000 $ 2,013 $ 13 Beginning balance NSP - 2,800 2,793 (7) Federal grant received 223,600 244,800 311,514 66,714 Revenue from NSP - - 155,617 155,617 TOTAL REVENUES & BEGINNING BALANCE 223,600 249,600 471,937 222,337 EXPENDITURES: Prior year Closing cost/down payment program - - 10,193 (10,193) Prior year MHDC home repair - - 14,000 (14,000) Prior year Ncall Research Inc. - - 2,803 (2,803) Prior year Dover interfaith ministry - - 13,478 (13,478) Prior year Homeowner rehab assistance - - 796 (796) Prior year Milford housing H/O rehab - - 52,782 (52,782) Current year closing cost/down payment program 40,000 40,000 39,807 193 Current year Dover interfaith ministry 27,500 27,500 27,500 - Current year MHDC emergency home repair 40,000 40,000 38,146 1,854 Current year Elizabeth W Murphey school 32,700 39,700 38,574 1,126 Current year Ncall Research Inc. 6,000 8,900 6,697 2,203 Current year Milford housing H/O rehab 32,700 39,700 36,776 2,924 Current year salaries 44,700 49,000 29,962 19,038 NSP expense - - 80,550 (80,550) TOTAL EXPENDITURES 223,600 244,800 392,064 (147,264) CDBG BALANCE CARRIED TO NEXT YEAR $ - $ 2,000 $ 2,013 $ (13) NSP BALANCE CARRIED TO NEXT YEAR $ - $ 2,800 $ 77,860 $ (75,060) 112

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E CITY OF DOVER STATE OF DELAWARE DEPARTMENT OF TRANSPORTATION GRANTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN UNRESERVED FUND BALANCE - BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2014 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES: Beginning balance $ - $ 209,200 $ 209,216 $ 16 Grants received: State 500,000 1,387,600 998,509 (389,091) Interest earned 500 500 324 (176) TOTAL REVENUES & BEGINNING BALANCE 500,500 1,597,300 1,208,049 (389,251) EXPENDITURES: Program expenditures Grant Related 500,000 1,395,100 941,217 (453,883) Program expenditures City Appropriated - 62,800 62,800 - TOTAL EXPENDITURES 500,000 1,457,900 1,004,017 453,883 Other financing sources (uses): Operating transfers-out - (60,500) (60,500) - BALANCE CARRIED TO NEXT YEAR $ 500 $ 78,900 $ 143,532 $ 64,632 113

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E FINANCIAL SCHEDULES PROPRIETARY FUND TYPES ENTERPRISE FUNDS The following schedules pertaining to the major enterprise funds are not required under GAAP, but are included for public review of budgetary compliance. Accordingly, no reconciliation to the GAAP financial statements is provided. WATER/WASTEWATER FUND The Water/Wastewater Fund accounts for all operating activity of the Water/Wastewater Utility. This includes service revenues, investment earnings on operating accounts, direct and indirect operating expenses, sewerage treatment fees, debt service, and transfers to other funds and the Improvement and Extension Fund. The Water/Wastewater Improvement and Extension Fund is used to account for all capital project and equipment purchases. The City utilizes revenue and expenditure accounts to record capital project receipts, transfers from the operating fund, and project costs. The funds are combined for GAAP reporting purposes with assets capitalized. ELECTRIC REVENUE FUND The Electric Revenue Fund accounts for all operating activity of the electric utility. This includes service revenues, investment earnings on operating accounts, direct and indirect operating expenses, purchased power cost, debt service, and transfers to other funds and the Improvement and Extension Fund. The Electric Improvement and Extension Fund is used to account for all capital project and equipment purchases. The City utilizes revenue and expenditure accounts to record capital project receipts, transfers from the operating fund, and project costs. The funds are combined for GAAP reporting purposes with assets capitalized. 114

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E CITY OF DOVER WATER/WASTEWATER FUND SCHEDULE OF REVENUES AND EXPENSES BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2014 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) Beginning Balance - Water $ 770,800 $ 732,700 $ 732,740 $ 40 Beginning Balance - Wastewater 412,600 441,400 441,414 14 Beginning Balance - Kent County Treatment Fee 141,600 (17,300) (17,267) 33 TOTAL BEGINNING BALANCES 1,325,000 1,156,800 1,156,887 87 REVENUES: Water fees 4,730,700 4,396,000 4,459,808 63,808 Wastewater fees 3,642,700 3,529,000 3,562,400 33,400 Wastewater adjustment 2,980,300 2,900,000 2,930,333 30,333 Groundwater adjustment 1,324,600 1,302,300 1,316,209 13,909 Miscellaneous services 82,000 64,400 61,802 (2,598) Water tank space rent 333,800 321,200 360,307 39,107 Interest earnings 23,100 10,000 (582) (10,582) Sewer Impact Fees 323,000 237,900 230,222 (7,678) Water Impact Fees 357,000 262,700 252,215 (10,485) Total Revenues 13,797,200 13,023,500 13,172,714 149,214 TOTAL BEGINNING BALANCES & REVENUES $ 15,122,200 $ 14,180,300 $ 14,329,601 $ 149,301 EXPENSES: Water services $ 433,900 $ 474,700 $ 498,016 $ (23,316) Engineering & inspection 664,400 499,000 459,073 39,927 Water construction 351,400 340,800 337,400 3,400 Water treatment plant 1,501,800 1,495,200 1,489,440 5,760 Wastewater services 945,100 885,700 900,965 (15,265) Kent County sewer fees 3,524,800 4,030,000 3,775,903 254,097 Intrafund service fee 1,233,400 1,458,800 1,133,580 325,220 Retirees health care 200,000 200,000 200,000 - Pension Unfunded Liability 339,400 - - - Debt Service - Water 403,800 403,800 566,703 (162,903) Debt Service - Wastewater 615,700 603,400 600,855 2,545 Other Employment Expenses 25,000 10,800 - 10,800 Transfer to Water Improvement & Extension Fund 1,200,000 1,233,200 1,233,200 - Transfer to Wastewater Improvement & Extension Fund 1,330,000 1,330,000 1,330,000 - Transfer to General Fund from Water 250,000 250,000 250,000 - Transfer to General Fund from Wastewater 250,000 250,000 250,000 - Total Expenses 13,268,700 13,465,400 13,025,135 440,265 Budget Balance - Water 1,056,400 711,700 763,636 (51,936) Budget Balance - Wastewater 797,100 (151,800) 87,458 (239,258) Budget Balance - Kent County Treatment Fee - 155,000 453,372 (298,372) Total Budget Balances - Working Capital 1,853,500 714,900 1,304,466 (589,566) TOTAL BUDGET BALANCES & EXPENSES $ 15,122,200 $ 14,180,300 $ 14,329,601 $ (149,301) 115

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E CITY OF DOVER WATER/WASTEWATER IMPROVEMENT & EXTENSION FUND SCHEDULE OF REVENUES AND EXPENSES BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2014 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) Beginning Balance -Water $ 1,620,000 $ 4,473,800 $ 4,473,776 $ (24) Beginning Balance -Wastewater 660,900 2,807,000 2,806,996 (4) TOTAL BEGINNING BALANCES 2,280,900 7,280,800 7,280,772 (28) REVENUES: Bond Proceeds-Water 2013 - 3,000,000 3,088,139 88,139 Bond Proceeds-WW 2013 - 1,067,900 1,035,339 (32,561) State Loan Fund-Wastewater 2011 - 62,000 62,000 - Interest earnings 25,000 25,000 44,316 19,316 Income from sale of assets - - 4,343 4,343 Miscellaneous Receipts - 66,000 88,314 22,314 Transfer from Water Fund 1,200,000 1,233,200 1,233,200 - Transfer from Wastewater Fund 1,330,000 1,330,000 1,330,000 - Transfer from Wastewater Impact Fee Reserve - 1,000,000 1,000,000 - Transfer from Water Impact Fee Reserve 390,000 - - - Total Revenues 2,945,000 7,784,100 7,885,651 101,551 TOTAL BEGINNING BALANCES & REVENUES $ 5,225,900 $ 15,064,900 $ 15,166,423 $ 101,523 EXPENSES: Engineering & Inspection $ - $ - $ - $ - Water 1,476,800 $7,641,300 1,151,743 6,489,557 Wastewater 1,251,000 5,252,400 720,231 4,532,169 Water Construction 90,000 90,000 89,500 500 Bond issue costs - - 115,717 (115,717) Total Expenses 2,817,800 12,983,700 2,077,191 10,906,509 Budget Balance - Water 1,655,700 1,021,200 7,588,801 (6,567,601) Budget Balance - Wastewater 752,400 1,060,000 5,500,431 (4,440,431) Total Budget Balances - Working Capital 2,408,100 2,081,200 13,089,232 (11,008,032) TOTAL BUDGET BALANCES & EXPENSES $ 5,225,900 $ 15,064,900 $ 15,166,423 $ (101,523) 0 0 0 0 116

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E CITY OF DOVER ELECTRIC REVENUE FUND SCHEDULE OF REVENUE AND EXPENSES BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2014 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) Beginning Balance - Working Capital $ 7,152,400 $ 6,620,900 $ 6,620,900 $ - REVENUES: Direct base sales 76,286,700 78,971,700 76,928,295 (2,043,405) Rental income 251,000 180,000 159,109 (20,891) Miscellaneous services 602,000 579,100 619,442 40,342 Utility tax 1,492,200 1,312,300 1,258,957 (53,343) Green Energy 135,800 130,000 127,926 (2,074) Interest earned-operating 119,400 12,000 213,178 201,178 Transfer from Rate Stabilization 4,000,000 7,000,000 7,000,000 - Intrafund Services - Water/Wastewater 98,500 98,500 130,787 32,287 Total Revenues 82,985,600 88,283,600 86,437,694 (1,845,906) TOTAL BEGINNING BALANCE & REVENUE $ 90,138,000 $ 94,904,500 $ 93,058,594 $ (1,845,906) EXPENSES: Power Supply & Generation Power Supply $ 23,832,000 $ 26,458,900 $ 29,484,681 $ (3,025,781) Power Supply Management 996,000 996,000 996,000 - Dover Sun Park Energy 1,565,800 1,729,200 1,821,037 (91,837) Solar Renewal Energy Credits 300,000 352,600 337,741 14,859 Capacity Charges 15,787,200 15,614,100 15,504,095 110,005 PJM Charges - Transmission & Fees 4,740,000 7,420,000 7,433,120 (13,120) PJM Charges - Load 12,812,900 17,274,000 14,855,117 2,418,883 Total Power Supply 60,033,900 69,844,800 70,431,791 (586,991) Plant Operations 6,015,800 5,791,600 5,729,922 61,678 Capacity Credits (15,079,800) (15,079,800) (15,065,472) (14,328) PJM Credits (397,000) (5,314,800) (5,946,189) 631,389 PJM Spot Market Energy (230,500) (1,004,500) (862,233) (142,267) Generation Fuels - 1,603,800 2,715,284 (1,111,484) Total Generation (9,691,500) (14,003,700) (13,428,688) (575,012) Utility Tax 1,492,200 1,312,300 1,258,957 53,343 Administration 597,000 628,400 548,055 80,345 Transmission/Distribution 3,302,500 3,776,300 3,789,955 (13,655) Electrical Engineering 1,192,200 1,285,300 1,312,063 (26,763) Systems Operations 543,600 675,800 739,407 (63,607) Meter Reading 220,300 273,800 284,229 (10,429) Contractual Services - Power Supply 100,000 100,000 28,074 71,926 Provision for Uncollectible 200,000 200,000 200,000 - Retirees Health Care 513,300 513,300 513,300 - OPEB Trust Contribution 975,700 975,700 975,700 - Pension Trust Contribution 1,314,200 - - - Green Energy Payment to DEMEC 135,800 130,000 127,926 2,074 Interest on Deposits 27,000 20,000 20,278 (278) Intrafund Service Fees 3,319,400 3,572,700 3,426,456 146,244 Other Appropriations: Electric Capital Project Fund 5,448,600 4,918,600 4,918,600 - General Fund 8,000,000 8,000,000 8,000,000 - Debt Service 3,301,900 3,301,900 3,308,739 (6,839) Workers Compensation - - - - Future Capacity Reserve - - - - Rate Stabilization Fund - - - - Other Employment Expenses 150,000 125,700 - 125,700 Inventory Reserve - - - - TOTAL EXPENSES 81,176,100 85,650,900 86,454,842 (803,942) Budget Balance - Working Capital 8,961,900 9,253,600 6,603,752 2,649,848 TOTAL BUDGET BALANCE & EXPENSES $ 90,138,000 $ 94,904,500 $ 93,058,594 $ 1,845,906 117

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E CITY OF DOVER ELECTRIC IMPROVEMENT AND EXTENSION FUND SCHEDULE OF REVENUES AND EXPENSES BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2014 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) Beginning Balance - Working Capital $ 3,091,000 $ 3,868,500 $ 3,980,178 $ 111,678 TOTAL BEGINNING BALANCES 3,091,000 3,868,500 3,980,178 111,678 REVENUES: Transfer from Electric Revenue Fund 5,448,600 4,918,600 4,918,600 - Interest Earnings 25,200 25,200 6,506 (18,694) Income from Sale of Assets - - 14,439 14,439 General Service Billing 440,000 440,000 250,238 (189,762) Total Revenues 5,913,800 5,383,800 5,189,783 (194,017) TOTAL BEGINNING BALANCES & REVENUES $ 9,004,800 $ 9,252,300 $ 9,169,961 $ (82,339) EXPENSES: Power Plant $ 2,117,800 $ 2,130,000 $ 1,547,017 $ 582,983 Transmission/Distribution 1,100,000 1,144,600 467,144 677,456 Engineering 2,405,800 2,615,500 1,213,271 1,402,229 Total Expenses 5,623,600 5,890,100 3,227,432 2,662,668 Budget Balance - Improvement & Extension Fund 3,381,200 3,362,200 5,942,529 (2,580,329) Total Budget Balances - Working Capital 3,381,200 3,362,200 5,942,529 (2,580,329) TOTAL BUDGET BALANCES & EXPENSES $ 9,004,800 $ 9,252,300 $ 9,169,961 $ 82,339 118

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E FINANCIAL STATEMENTS PROPRIETARY FUND TYPES INTERNAL SERVICE FUNDS WORKERS’ COMPENSATION INSURANCE FUND The City has created this fund to account for the revenues and expenses related to a self- insured Workers’ Compensation Fund. The revenues are received from the City's various funds. These funds contribute to the Workers’ Compensation Fund an amount based on salaries at a pre-determined assessment rate. Claims paid, reinsurance cost and third party administrator's fees are charged to this fund. Budgetary schedule is included for public review of budgetary compliance. 119

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E CITY OF DOVER INTERNAL SERVICE FUND - WORKERS' COMPENSATION SCHEDULE OF REVENUES AND EXPENSES BUDGET (NON-GAAP BASIS) AND ACTUAL YEAR ENDED JUNE 30, 2014 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) OPERATING REVENUES: Beginning Balance $ 1,200,600 $ 1,267,800 $ 1,267,842 $ 42 Interest Earned 10,600 10,600 21,156 10,556 City Contribution 490,700 490,700 502,143 11,443 Miscellaneous Revenue - 3,100 834 (2,266) TOTAL REVENUES $ 1,701,900 $ 1,772,200 $ 1,791,975 $ 19,775 OPERATING EXPENSES: Program Expenses $ 450,000 $ 450,000 $ 490,730 $ (40,730) Contractual Services 57,000 57,000 20,000 37,000 Insurance 76,500 92,600 89,487 3,113 Bank Fees 600 600 1,256 (656) State of Delaware - Self-Insurance Tax 37,000 37,000 33,774 3,226 TOTAL EXPENSES $ 621,100 $ 637,200 $ 635,247 $ 1,953 BUDGET BALANCE - CARRY FORWARD $ 1,080,800 $ 1,135,000 $ 1,156,728 $ 21,728 120

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E FINANCIAL STATEMENTS FIDUCIARY FUND TYPES AGENCIES DOWNTOWN DOVER PARTNERSHIP The City established the Downtown Dover Partnership as an agency for the development of the downtown urban area. FOURTH OF JULY CELEBRATION COMMITTEE The Fourth of July Celebration Committee is designed to provide recreation enjoyment and educational events commemorating the birth of our nation. DOVER LIBRARY FOUNDATION The Dover Library Foundation was formed to provide fund raising for the construction of a new regional library. 121

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section – Supplementary Information – Part E CITY OF DOVER COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS YEAR ENDED JUNE 30, 2014 BALANCE BALANCE JUNE 30, 2013 ADDITIONS DEDUCTIONS JUNE 30, 2014 DOWNTOWN DOVER PARTNERSHIP ASSETS: Cash $ 240,629 $ 3,301,244 $ 3,079,786 $ 462,087 Receivables 50,771 9,785 7,026 53,530 Prepaid Items 45 - 45 - Total Assets $ 291,445 $ 3,311,029 $ 3,086,857 $ 515,617 LIABILITIES: Vouchers Payable $ 75,800 $ 1,752,665 $ 1,780,295 $ 48,170 Deposit Payable 7,015 20,417 - 27,432 Due to Agencies 208,630 231,385 - 440,015 Total Liabilities $ 291,445 $ 2,004,467 $ 1,780,295 $ 515,617 4TH JULY CELEBRATION COMMITTEE ASSETS: Cash $ 24,802 $ 36,087 $ 23,570 $ 37,319 Total Assets $ 24,802 $ 36,087 $ 23,570 $ 37,319 LIABILITIES: Vouchers Payable $ 340 $ 23,254 $ 23,117 $ 477 Due to Agencies 24,462 36,087 23,707 36,842 Total Liabilities $ 24,802 $ 59,341 $ 46,824 $ 37,319 TOTAL-ALL AGENCY FUNDS ASSETS: Cash & Investments $ 265,431 $ 3,337,331 $ 3,103,356 $ 499,406 Receivables 50,771 9,785 7,026 53,530 Prepaid Items 45 - 45 - Total Assets $ 316,247 $ 3,347,116 $ 3,110,427 $ 552,936 LIABILITIES: Vouchers Payable $ 76,140 $ 1,775,919 $ 1,803,412 $ 48,647 Deposit Payable 7,015 20,417 - 27,432 Due to Agencies 233,092 267,472 23,707 476,857 Total Liabilities $ 316,247 $ 2,063,808 $ 1,827,119 $ 552,936 122

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

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2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section STATISTICAL SECTION This part of the City of Dover’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government’s overall financial health. FINANCIAL TRENDS These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. REVENUE CAPACITY These schedules contain information to help the reader assess the City’s most significant local revenue source, property tax. DEBT CAPACITY The information contained in these schedules will help the reader assess the affordability of the City’s current levels of outstanding debt as well as the City’s ability to issue additional debt in the future. DEMOGRAPHIC AND ECONOMIC INFORMATION These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. OPERATING INFORMATION These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 125

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 1 City of Dover Net Position by Component Last Ten Fiscal Years (Accrual basis of accounting) Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Governmental Activities Invested in capital assets, net of related debt $ 50,738,483 $ 49,577,021 $ 49,642,124 $ 38,839,995 $ 35,742,504 $ 35,752,624 $ 35,255,463 $ 29,709,046 $ 27,056,161 $ 23,343,787 Restricted 612,054 721,682 482,780 1,774,167 1,250,342 1,758,470 1,602,932 1,591,678 887,235 2,023,096 Unrestricted (7,142,570) (4,791,553) (6,759,433) (99,435) 4,820,682 9,536,614 15,155,125 13,849,061 11,590,341 7,431,716 Total governmental activities net position 44,207,967 45,507,150 43,365,471 40,514,727 41,813,528 47,047,708 52,013,520 45,149,785 39,533,737 32,798,599 Business-type activities Invested in capital assets, net of related debt 101,670,949 100,079,972 98,303,263 97,270,906 96,660,480 91,471,776 101,154,934 89,289,351 89,089,027 82,878,764 Restricted 36,123,755 34,665,736 33,836,315 34,148,330 31,302,487 34,372,050 23,758,183 29,762,946 33,801,000 32,620,056 Unrestricted 36,098,998 39,534,763 33,947,753 23,286,232 19,318,633 18,614,907 16,263,139 14,371,418 11,859,329 11,569,305 Total business-type activities net position 173,893,702 174,280,471 166,087,331 154,705,468 147,281,600 144,458,733 141,176,256 133,423,715 134,749,356 127,068,125 Primary government Invested in capital assets, net of related debt 152,409,432 149,656,993 147,945,387 136,110,901 132,402,984 127,224,400 136,410,397 118,998,397 116,145,188 106,222,551 Restricted 36,735,809 35,387,418 34,319,095 35,922,497 32,552,829 36,130,520 25,361,115 31,354,624 34,688,235 34,643,152 Unrestricted 28,956,428 34,743,210 27,188,320 23,186,797 24,139,315 28,151,521 31,418,264 28,220,479 23,449,670 19,001,021 Total primary government net position $ 218,101,669 $ 219,787,621 $ 209,452,802 $ 195,220,195 $ 189,095,128 $ 191,506,441 $ 193,189,776 $ 178,573,500 $ 174,283,093 $ 159,866,724 126

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 2 City of Dover Changes in Net Position Last Ten Fiscal Years (Accrual basis of accounting) Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Expenses Governmental activities: General government $ 1,288,977 $ 1,474,045 $ 1,180,327 $ 1,248,124 $ 1,510,308 $ 1,855,983 $ 1,384,276 $ 1,472,104 $ 836,668 $ 905,382 Public safety 19,219,986 17,989,463 17,638,304 16,848,343 16,357,692 15,929,187 15,120,737 14,509,849 13,879,609 12,533,566 Public Works 6,594,829 6,099,484 8,135,172 6,257,946 7,115,319 7,539,463 4,355,206 4,791,235 4,493,296 4,547,747 Library and recreation 2,942,800 2,313,048 2,377,363 2,731,492 2,265,205 2,417,236 2,108,664 1,875,872 1,309,601 1,706,743 Community and economic development 676,554 939,966 773,208 1,173,546 2,228,744 724,555 497,914 639,545 600,907 711,743 Central services 512,586 454,816 469,385 599,498 544,611 550,886 586,274 552,042 447,877 236,451 Financial administration 1,368,048 1,122,830 1,146,524 2,463,426 2,353,180 2,557,465 1,425,074 1,588,425 1,774,380 1,582,911 Other post-employment benefits 3,348,267 5,119,778 6,534,630 6,142,627 2,843,480 2,441,541 - - - - Interest on long-term debt 122,812 114,785 90,161 75,397 78,581 87,491 82,657 106,815 118,130 129,352 Total governmental activities expenses 36,074,859 35,628,215 38,345,074 37,540,399 35,297,120 34,103,807 25,560,802 25,535,887 23,460,468 22,353,895 Business-type activities Water and Sewer 11,397,992 10,905,358 11,068,607 10,912,722 11,971,445 11,196,913 10,387,198 9,846,771 9,263,236 8,678,186 Electric 74,481,048 74,595,585 77,625,673 90,296,244 90,940,056 94,475,940 88,442,048 88,297,987 58,620,196 56,384,796 Total business-type activities 85,879,040 85,500,943 88,694,280 101,208,966 102,911,501 105,672,853 98,829,246 98,144,758 67,883,432 65,062,982 Total primary government expenses 121,953,899 121,129,158 127,039,354 138,749,365 138,208,621 139,776,660 124,390,048 123,680,645 91,343,900 87,416,877 Program Revenues Governmental activities: Charges for services: General government 2,137,574 2,463,437 4,043,168 1,503,243 1,307,296 1,426,972 1,603,935 1,683,817 1,428,996 1,209,067 Public safety 4,676,162 4,240,847 4,803,827 4,682,687 4,309,516 4,358,641 4,571,911 4,499,315 4,487,028 3,684,792 Public works 2,595,648 2,624,877 1,903,623 2,173,434 1,340,729 1,396,801 1,334,492 1,312,328 1,253,313 1,081,064 Library and recreation 699,622 656,001 632,824 632,861 650,283 715,404 788,875 1,100,412 549,959 447,948 Operating grants and contributions 2,159,616 2,914,696 2,654,051 5,032,926 3,813,842 2,758,194 2,511,244 3,108,545 3,156,369 2,267,722 Capital grants and contributions 1,226,559 2,107,444 6,292,303 856,338 169,130 1,090,838 647,724 790,612 500,103 1,983,669 Total governmental activities program revenues 13,495,181 15,007,302 20,329,796 14,881,489 11,590,796 11,746,850 11,458,181 12,495,029 11,375,768 10,674,262 (Continued) 127

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section (Table 2 Continued - Changes in Net Position) Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Program Revenues Business-type activities: Charges for services: Water and Sewer 13,268,213 13,387,706 13,775,833 14,033,678 11,531,595 11,319,027 12,158,812 11,819,643 12,224,877 10,804,685 Electric 79,489,192 90,685,693 93,529,401 101,902,619 100,278,474 101,420,982 96,858,790 87,014,071 68,005,332 63,303,032 Capital Contributions 401,947 - 441,285 997,750 392,855 - 2,078,040 705,572 272,000 368,740 Total business-type activities program revenues 93,159,352 104,073,399 107,746,519 116,934,047 112,202,924 112,740,009 111,095,642 99,539,286 80,502,209 74,476,457 Total primary government program revenues 106,654,533 119,080,701 128,076,315 137,263,843 123,793,720 124,330,805 122,842,492 110,997,467 92,997,238 85,852,225 Net (expense)/revenue: Governmental activities (22,579,678) (20,620,913) (18,015,278) (18,015,278) (23,706,324) (22,356,957) (22,356,957) (14,102,621) (13,040,858) (12,084,700) Business-type activities 7,280,312 18,572,456 19,052,239 28,239,767 9,291,423 7,067,156 5,422,789 710,040 (17,642,549) 6,593,025 Total primary government net revenue (expense) (15,299,366) (2,048,457) 1,036,961 10,224,489 (14,414,901) (15,289,801) (16,934,168) (13,392,581) (30,683,407) (5,491,675) General Revenues and Other Changes in Net Position Governmental activities: Property taxes 11,094,479 11,126,395 11,050,198 10,904,908 10,029,584 10,075,401 9,557,982 9,032,995 8,792,652 7,370,318 Transfer taxes 1,543,626 1,107,686 1,373,103 1,461,983 867,692 1,197,425 3,515,422 3,008,371 3,048,064 2,379,548 Gain (loss) on sale of capital assets - - - - - - - - - 3,750 Investment earnings 142,390 36,793 141,925 137,218 268,748 585,264 726,683 1,230,540 640,381 332,853 Transfers 8,500,000 10,491,718 8,300,796 8,856,000 7,306,120 5,533,055 7,166,269 5,385,000 6,338,741 6,611,024 Total governmental activities 21,280,495 22,762,592 20,866,022 21,360,109 18,472,144 17,391,145 20,966,356 18,656,906 18,819,838 16,697,493 Business-type activities: Gain (loss) on sale of capital assets - - - - - - - - (127,477) (13,264) Investment earnings 832,919 112,402 630,420 554,787 837,564 1,748,376 2,652,414 2,664,831 1,528,672 1,312,098 Transfers (8,500,000) (10,491,718) (8,300,796) (8,856,000) (7,306,120) (5,533,055) (7,166,269) (5,385,000) (6,338,741) (6,611,024) Total business-type activities (7,667,081) (10,379,316) (7,670,376) (8,301,213) (6,468,556) (3,784,679) (4,513,855) (2,720,169) (4,937,546) (5,312,190) Total primary government 13,613,414 12,383,276 13,195,646 13,058,896 12,003,588 13,606,466 16,452,501 15,936,737 13,882,292 11,385,303 Change in Net Position Government activities (1,299,183) 2,141,679 2,850,744 3,344,831 (5,234,180) (4,965,812) (1,390,601) 4,554,285 5,778,980 4,612,793 Business-type activities (386,769) 8,193,140 11,381,863 19,938,554 2,822,867 3,282,477 908,934 (2,010,129) (22,580,095) 1,280,835 Total primary government $ (1,685,952) $ 10,334,819 $ 14,232,607 $ 23,283,385 $ (2,411,313) $ (1,683,335) $ (481,667) $ 2,544,156 $ (16,801,115) $ 5,893,628 128

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 3 City of Dover Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified accrual basis of accounting) Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 General Fund Reserved $ - $ - $ - $ - $ 315,580 $ 709,817 $ 528,145 $ 2,023,169 $ 2,158,007 $ 1,099,450 Unreserved - - - - 7,242,323 8,305,396 9,387,795 7,046,831 6,515,829 4,156,574 Non-spendable 207,884 227,457 198,175 191,567 - - - - - - Restricted 129,476 131,237 83,356 85,070 - - - - - - Committed 723,300 936,899 920,475 3,484,203 - - - - - - Assigned 3,163,431 3,519,012 658,890 614,559 - - - - - - Unassigned 3,435,079 3,391,714 3,007,983 3,385,209 - - - - - - Total General Fund 7,659,170 8,206,319 4,868,879 7,760,608 7,557,903 9,015,213 9,915,940 9,070,000 8,673,836 5,256,024 All other governmental funds Special revenue funds Unreserved - - - - 872,309 881,332 5,180,097 5,248,929 2,829,793 2,984,929 Non-spendable 2,447 - 13,099 4,203 - - - - - - Restricted 482,578 590,445 399,424 764,512 - - - - - - Assigned - 123,349 171,381 289,221 - - - - - - Total all other governmental funds 485,025 713,794 583,904 1,057,936 872,309 881,332 5,180,097 5,248,929 2,829,793 2,984,929 Total fund balances $ 8,144,195 $ 8,920,113 $ 5,452,783 $ 8,818,544 $ 8,430,212 $ 9,896,545 $ 15,096,037 $ 14,318,929 $ 11,503,629 $ 8,240,953 NOTE The fiscal years prior to 2011 show fund balances as they were classified and reported prior to GASB 54. 129

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 4 City of Dover Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified accrual basis of accounting) Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Revenues Fines $ 1,011,156 $ 912,004 $ 1,202,615 $ 1,665,496 $ 1,418,354 $ 1,323,041 $ 1,262,180 $ 1,314,246 $ 1,759,979 $ 1,117,440 Library revenue 498,553 471,065 475,822 444,455 465,387 514,458 517,697 989,006 451,705 346,652 Licenses and permits 2,952,015 2,548,913 2,816,866 2,417,363 2,424,768 2,599,948 2,916,749 2,689,348 2,465,845 2,251,091 Sanitation fees and rebates 2,595,648 2,624,877 1,903,623 2,173,434 1,340,729 1,396,801 1,333,436 1,293,399 1,253,313 1,081,064 Recreation 49,144 40,446 44,522 44,292 36,100 47,079 34,111 12,793 - - Miscellaneous services 1,831,683 2,470,200 3,940,294 1,480,845 1,247,096 1,278,251 1,351,160 1,367,960 996,174 916,244 Taxes 12,655,035 12,333,520 12,462,532 12,366,891 10,897,276 11,272,826 13,073,404 12,041,366 11,840,716 9,749,866 Grants 3,416,319 5,119,089 8,909,758 5,551,175 4,482,259 3,513,365 3,148,194 4,550,607 3,919,800 2,812,082 Court of Chancery fees 1,034,460 917,700 863,220 766,340 675,390 738,240 883,880 929,120 792,280 710,380 Investment income 122,490 45,198 117,405 112,722 237,631 513,873 638,782 1,154,829 603,451 315,642 Total revenues 26,166,503 27,483,012 32,736,657 27,023,013 23,224,990 23,197,882 25,159,593 26,342,674 24,083,263 19,300,461 Expenditures General government 1,271,523 1,107,122 1,093,772 1,348,911 1,525,854 1,661,742 1,319,774 1,000,622 836,419 902,139 Library services 1,697,982 5,514,217 13,518,569 4,369,578 1,951,347 2,150,585 1,391,974 1,253,300 1,162,301 1,144,289 Public safety 19,130,832 18,048,642 17,001,619 16,139,953 15,948,298 15,680,044 15,068,451 15,055,746 13,922,271 12,432,257 Public works 2,572,965 1,758,405 2,074,061 2,535,060 2,504,061 3,219,659 2,928,236 2,551,962 3,340,643 2,478,911 Recreational services 683,363 651,341 827,230 834,124 746,868 869,134 2,699,725 1,452,987 705,241 617,624 Streets and sanitation services 4,634,091 2,990,430 3,280,165 3,383,465 3,181,025 3,279,188 3,675,282 3,018,222 3,242,649 2,711,775 Engineering services - - - - - - - 314,728 289,208 253,299 Financial administration 1,002,539 909,877 902,009 866,314 895,570 1,009,240 1,055,619 829,002 725,963 687,450 Garage and stores 415,593 431,542 503,036 490,113 526,286 491,450 486,966 402,915 417,202 418,710 Insurance 272,895 241,395 198,241 203,343 197,723 199,643 176,947 165,584 153,202 168,430 Retiree health care lump sum 1,636,500 1,620,600 1,614,241 1,297,509 1,006,397 3,265,857 758,185 736,286 645,457 590,587 Employee pension unfunded liability 121,000 1,693,500 1,545,000 1,544,978 - - 134,775 402,204 - - Street lights 774,533 878,760 986,430 968,562 956,860 937,013 917,438 624,243 545,426 534,682 Community and economic development 676,554 939,966 773,208 1,173,546 2,228,744 724,555 497,914 639,545 600,907 711,743 Miscellaneous - - - - - - - - - 16,000 (Continued) 130

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section (Table 4 - Continued Changes in Fund Balances of Governmental Funds) Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Expenditures Debt service Principal 429,239 296,003 275,000 270,000 260,000 365,000 350,000 368,384 464,480 490,171 Interest 122,812 73,071 52,734 65,225 68,410 77,319 87,468 96,644 107,959 121,350 Other charges (issuance of debt) - 1,029 27,255 - - - - - - - Total expenditures 35,442,421 37,155,900 44,672,570 35,490,681 31,997,443 33,930,429 31,548,754 28,912,374 27,159,328 24,279,417 Excess of revenues over(under) expenditures (9,275,918) (9,672,888) (11,935,913) (8,467,668) (8,772,453) (10,732,547) (6,389,161) (2,569,700) (3,076,065) (4,978,956) Other financing sources (uses) Bond proceeds - 2,648,500 851,500 - - - - - - - Transfers in 11,458,445 12,666,208 10,959,204 12,420,329 9,156,575 12,683,925 12,369,176 8,316,722 8,850,767 8,965,067 Transfers out (2,958,445) (2,174,490) (2,658,408) (3,564,329) (1,850,455) (7,150,870) (5,202,907) (2,931,722) (2,512,026) (2,354,043) Sale of capital assets - - - - - - - - - 3,750 Total other financing sources (uses) 8,500,000 13,140,218 9,152,296 8,856,000 7,306,120 5,533,055 7,166,269 5,385,000 6,338,741 6,614,774 Net change in fund balances $ (775,918) $ 3,467,330 $ (2,783,617) $ 388,332 $ (1,466,333) $ (5,199,492) $ 777,108 $ 2,815,300 $ 3,262,676 $ 1,635,818 Debt service as a percentage of noncapital expenditures 1.74% 1.14% 1.07% 0.85% 1.05% 1.42% 1.49% 1.66% 2.25% 2.43% Capital outlay included in total expenditures (1) $ 3,777,578 $ 4,872,122 $ 13,927,288 $ 5,296,536 $ 2,434,391 $ 2,698,627 $ 4,559,625 $ 3,554,679 $ 3,523,649 $ 2,084,385 NOTES (1) Capital outlay has been included in functional expenditures. Debt service as a percentage of non-capital expenditures excludes capital outlay expenditures. 131

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 5 City of Dover Governmental Activities Tax Revenues by Source Last Ten Fiscal Years (accrual basis of accounting) Fiscal Property Transfer Year Tax Tax Total 2014 $ 11,094,479 $ 1,543,626 $ 12,638,105 2013 11,126,395 1,107,686 12,234,081 2012 11,050,198 1,373,103 12,423,301 2011 10,904,908 1,461,983 12,366,891 2010 10,029,584 867,692 10,897,276 2009 10,075,401 1,197,425 11,272,826 2008 9,557,982 3,515,422 13,073,404 2007 9,032,995 3,008,371 12,041,366 2006 8,792,652 3,048,064 11,840,716 2005 7,370,318 2,379,548 9,749,866 NOTES 1. Property Tax rate $.3378 per $100 of 100% assessed value (See Table 6 for tax rates) includes payments in lieu of taxes farm land roll back and penalties. 2. Transfer Taxes equal 1.5% of the real property sales value. 3. Assessed value by major component not available. (See Table 6 for total assessed value.) 132

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 6 City of Dover, Delaware Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years REAL PROPERTY Ratio of Direct Less: Total Taxable Tax Fiscal Total Assessed Exempt Total Taxable Estimated Value to Total Rate Year Value Properties Assessed Value Actual Value Assessed Value Per $100 2014 $ 4,525,547,960 $ 1,365,654,100 $ 3,159,893,860 $ 4,525,547,960 69.82% $ 0.3378 2013 4,510,303,860 1,328,807,500 3,181,496,360 4,510,303,860 70.54% 0.3378 2012 4,469,369,160 1,300,061,400 3,169,307,760 4,469,369,160 70.91% 0.3378 2011 4,363,518,360 1,226,879,300 3,136,639,060 4,363,518,360 71.88% 0.3378 2010 4,139,869,700 1,232,858,580 2,907,011,120 4,139,869,700 70.22% 0.3300 2009 4,124,562,920 1,225,269,600 2,899,293,320 4,124,562,920 70.29% 0.3300 2008 3,406,762,915 616,277,700 2,790,485,215 3,406,762,915 81.91% 0.3300 2007 3,516,580,775 618,433,400 2,898,147,375 3,516,580,775 82.41% 0.3300 2006 3,146,043,800 618,735,300 2,527,308,500 3,146,043,800 80.33% 0.3300 2005 2,605,638,000 841,290,300 1,764,347,700 2,605,638,000 67.71% 0.4110 Source: Tax Assessor's Office, City of Dover. NOTES 1. There is no tax on personal properties. Therefore, no figures are presented. 2. In 2003 the City changed assessed values to 100% of estimated actual values from 60%. In doing so, the tax rate was lowered from $ .685 to $ .411 per $100. Had the tax rate been rolled back to a revenue neutral rate, the rate would have been $ .3310 per $100. The revised rate represents an $ .08 increase. 3. In 2005, the City property values were reassessed, effective for tax year 2006. The tax rate was lowered from $ .411 to $ .330 per $100. Had the tax rate been rolled back to a revenue neutral rate, the rate would have been $ .310 per $100. The revised rate represents a $ .02 increase. 4 In 2010, the City property values were reassessed, effective for tax year 2011. The tax rate was increased from $ .330 to $ .3378 per $100. Had the tax rate been rolled back to a revenue neutral rate, the rate would have been $ .3108 per $100. The revised rate represents a $ .027 rate increase. 133

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 7 City of Dover, Delaware NOTES Property Tax Rates - All Direct and Overlapping Governments with the Capital School District 1. Section 48 of the City of (Per $100 of Assessed Value) Dover charter provides Last Ten Fiscal Years that the amount of money to be raised through property taxes shall not exceed 2% of the total taxable assessment. Direct Overlapping City Capital Vo-Tech Total 2. Kent County Property Fiscal of Kent School School Direct & tax rates reflect the 1987 Year Dover County District District Overlapping reappraisal of properties in Kent County. 2014 $ 0.3378 $ 0.300 $ 1.850 $ 0.1372 $ 2.625 2013 0.3378 0.300 1.909 0.1372 2.684 3. The City of Dover reassessed 2012 0.3378 0.300 1.832 0.1351 2.605 property values and "rolled 2011 0.3378 0.300 1.832 0.1351 2.605 back" the tax rate in 2006. 2010 0.3300 0.310 1.769 0.1304 2.539 2009 0.3300 0.310 1.543 0.1219 2.305 4. In 2010, the City property 2008 0.3300 0.250 1.480 0.1219 2.182 values were reassessed, 2007 0.3300 0.250 1.534 0.1160 2.230 * effective for tax year 2011 2006 0.3300 0.250 1.459 0.1180 2.157 * Tax rate increased to $ .3378 2005 0.4110 0.250 1.403 0.0887 2.153 * Sources: Tax Assessor's Office - City Receiver of Taxes Office - Kent County * Corrected Capital School District & Vo-tech tax rates Property Tax Rates - FY 2014 All Direct & Overlapping Governments 0.137 0.338 0.300 1.850 City of Dover Kent County Capital School Vo-Tech School 134

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 8 City of Dover, Delaware Principal Tax Payers Current Year and Nine Years Ago PERCENTAGE PERCENTAGE OF TOTAL OF TOTAL 2014 TAXABLE 2005 TAXABLE ASSESSED ASSESSED ASSESSED ASSESSED TAX PAYERS VALUATION RANK VALUATION VALUATION RANK VALUATION Dover Downs Prop, Inc. $146,847,600 1 4.65% $87,257,686 1 4.95% Dover Mall LP/Dover Commons 87,751,600 2 2.78% 45,018,200 2 2.55% Dover Medical Center 27,270,100 3 0.86% - - - Dover South Coast Partnership 25,035,100 4 0.79% 9,777,500 9 0.55% Kraft-General Foods Corp. 19,565,300 5 0.62% 31,425,800 3 1.78% Robino Bay Court Plaza 14,400,000 6 0.46% 6,593,000 - 0.37% Berks City Real Estate LLC 13,492,400 7 0.43% 7,635,700 - 0.43% Millers Dover Downs 13,463,600 8 0.43% 4,632,200 - 0.26% G & I VA Dover Country Club LLC 13,176,500 9 0.42% 7,184,200 - 0.41% McKee Road Business Park LLC 12,774,400 10 0.40% 8,821,700 - 0.50% Del-Homes Catalog Group - - - 9,241,600 10 0.52% Dover Wipes - - - 20,965,800 4 1.19% K.W. Lands/Sheraton/Hampton - - - 9,987,300 8 0.57% Playtex Apparel Inc. - - - 10,812,400 7 0.61% Energizer(was Playtex Products Inc.) - - - 13,724,600 5 0.78% Woodmill Capital Advisors LLC - - - 12,367,200 6 0.70% $373,776,600 11.84% $285,444,886 16.17% Source: Tax Assessor's Office, City of Dover 135

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 9 City of Dover, Delaware Property Tax Levies and Collections Last Ten Fiscal Years Total Collected Within Collection Collected in Total Collection Fiscal Tax the Fiscal Year as Percentage Subsequent Collections as Percentage Year Levy of the Levy of Levy Years to Date of Levy 2014 $ 10,696,886 $ 10,493,954 98.1% $ - $ 10,493,954 98.10% 2013 10,594,623 10,398,888 98.2% 181,590 10,580,478 99.87% 2012 10,549,631 10,280,930 97.5% 263,665 10,544,595 99.95% 2011 10,481,734 10,166,681 97.0% 310,913 10,477,594 99.96% 2010 9,525,034 9,314,327 97.8% 207,790 9,522,117 99.97% 2009 9,512,522 9,206,158 96.8% 305,439 9,511,597 99.99% 2008 9,074,777 8,937,384 98.5% 137,294 9,074,678 100.00% 2007 8,448,462 8,242,898 97.6% 205,557 8,448,455 100.00% 2006 8,287,536 8,081,411 97.5% 206,125 8,287,536 100.00% 2005 7,109,977 6,941,217 97.6% 168,760 7,109,977 100.00% Source: City of Dover Assessor & Customer Service Reports. Property Taxes Levied Last Ten Fiscal Years $12 $10 Millions $8 $6 $4 $2 $‐ 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 NOTES 1. Section 48 of the City of Dover charter provides that the maximum budget to be raised through property taxes shall not exceed 2% of the total taxable assessment. 2. Total Tax Levy represents the annual tax billings, quarterly billings and adjustments from tax appeals. 3. The table excludes payments in lieu of taxes and farm land roll back taxes. 136

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 10 City of Dover Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Business-type Activities General Water/Sewer Electric Total Percentage Fiscal Obligation Capital Revenue Revenue Capital Primary of Personal Per Year Bonds Leases Bonds Bonds Leases Government Income Capita Population 2014 $ 4,049,758 $ - $ 14,412,347 $ 23,940,000 $ - $ 42,402,105 5.4% 1,130 37,540 2013 4,478,997 - 10,926,717 26,110,000 - 41,515,714 5.1% 1,138 36,492 2012 2,085,815 - 10,865,354 27,995,025 - 40,946,194 5.0% 1,129 36,267 2011 1,499,143 - 7,913,384 30,033,446 - 39,445,973 4.9% 1,070 36,047 2010 1,758,971 - 3,765,547 34,543,730 - 40,068,248 5.7% 1,112 36,559 2009 2,008,800 - 4,126,124 36,690,524 - 42,825,448 6.3% 1,200 35,997 2008 2,363,628 - 4,769,332 16,439,872 - 23,572,832 3.7% 690 35,503 2007 2,703,457 - 5,391,320 18,115,568 - 26,210,345 4.1% 807 34,689 2006 3,038,286 - 6,752,131 19,741,258 68,892 29,600,567 4.7% 914 33,965 2005 3,363,115 152,864 8,087,613 21,496,483 161,836 33,261,911 5.3% 1,037 33,389 Source: City of Dover Financial Records Population Source: Delaware Population Consortium Annual Population Projections 137

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 11 City of Dover, Delaware Ratio of Net General Obligation Bonded Debt To Assessed Value and Net Bonded Debt Per Capita Last Ten Fiscal Years Ratio of Net Net Net Bonded Bonded Taxable Gross Net Debt To Debt Fiscal Assessed Bonded Bonded Assessed Per Year Population Value Debt Debt Value Capita 2014 37,540 $3,159,893,860 $ 4,049,758 $ 4,049,758 0.13% 107.88 2013 36,492 3,181,496,360 4,478,997 4,478,997 0.14% 122.74 2012 36,267 3,169,307,760 2,085,815 2,085,815 0.07% 57.51 2011 36,047 3,136,639,060 1,499,143 1,499,143 0.05% 41.59 2010 36,559 2,907,011,120 1,550,000 1,550,000 0.05% 42.40 2009 35,997 2,899,293,320 1,550,000 1,550,000 0.05% 43.06 2008 35,503 2,790,485,215 2,080,000 2,080,000 0.07% 58.59 2007 34,689 2,898,147,375 2,445,000 2,445,000 0.09% 70.48 2006 33,965 2,527,308,500 2,795,000 2,795,000 0.10% 82.29 2005 33,389 1,764,347,700 3,140,000 3,140,000 0.12% 94.04 Source: City of Dover Financial Records, Tax Assessor’s Office and Delaware Population Consortium Annual Population Projections. NOTES 1. This table includes all long-term general obligation bonded debt only. The Enterprise Funds have no general obligation debt. 2. Assessed value reflects the net billable tax base and does not include the exempt value, exemption for Senior Citizens and exemption for disability. 138

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section . Table 12 City of Dover, Delaware Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures Last Ten Fiscal Years Ratio of Debt Service Total Total to Total Fiscal Debt General General (1) Year Principal Interest Service Expenditures Expenditures 2014 $ 429,239 $ 122,812 $ 552,051 $ 39,646,120 1.39% 2013 296,003 73,071 369,074 40,517,512 0.91% 2012 275,000 52,734 327,263 47,743,864 0.69% 2011 270,000 65,225 335,225 38,898,945 0.86% 2010 260,000 68,410 328,410 32,786,465 1.00% 2009 365,000 77,319 442,319 33,766,292 1.31% 2008 350,000 87,468 437,468 35,703,156 1.23% 2007 345,000 96,232 441,232 34,651,840 1.27% 2006 335,000 103,718 438,718 30,169,206 1.45% 2005 330,000 110,371 440,371 27,912,865 1.58% Source: City of Dover Financial Records. NOTES 1. The General Expenditures include all operating items, capital items and debt service. 139

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 13 City of Dover, Delaware Computation of Direct and Overlapping Debt with the Capital School District June 30, 2014 Percentage Amount Net Debt Applicable to Applicable to Jurisdiction Outstanding City of Dover City of Dover City of Dover $ 4,049,758 100% $ 4,049,758 (1) Kent County 47,453,047 6% 2,847,183 (2) Capital School District 69,989,915 - TOTAL $ 121,492,720 $ 6,896,941 Sources: City of Dover Financial Records, Kent County Levy Court - Accounting Department and Capital School District - Administration Department. NOTES 1. Kent County: Total debt for Kent County is $47,453,047 as of June 30, 2014. Although, Kent County's bonds are general obligation bonds, $42,549,433 is payable from the Kent County Sewer Fund(s) or other committed sources. 2. Capital School District: As of June 30, 2014 the net outstanding debt was $69,989,915. Percentage and amount applicable to the City is not available. 140

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 14 City of Dover, Delaware Computation of Legal Debt Margin Last Ten Fiscal Years (amounts expressed in thousands) Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Debt Limit $ 157,995 $ 159,075 $ 156,429 $ 155,838 $ 144,341 $ 144,965 $ 697,621 $ 724,537 $ 631,827 $ 441,087 Net (Taxable) Assessed Value on Books 3,159,894 3,181,496 3,169,308 3,136,639 2,907,011 2,899,293 2,790,485 2,898,147 2,527,309 1,764,348 Total net debt applicable to limit 4,050 4,479 1,550 1,820 2,080 2,445 2,795 3,140 3,475 3,805 Legal Debt Margin $ 153,945 $ 154,302 $ 154,288 $ 142,521 $ 142,885 $ 695,176 $ 721,742 $ 629,848 $ 437,612 $ 429,899 Total Net Debt applicable to limit as a percentage of debt limit 2.56% 2.83% 1.00% 1.26% 1.44% 0.35% 0.39% 0.50% 0.79% 0.89% Legal Debt Margin Calculation for Fiscal Year 2013 Net (Taxable) Assessed Value on Books $ 3,159,894 Debt Limit - 5 Percent of Total Assessed Value $ 157,995 DEBT (For which the City's full faith and credit has been pledged) Gross Bonded Debt 4,050 LEGAL DEBT MARGIN $ 153,945 Source: City of Dover Financial Reports, City of Dover Charter, Section 50(b), and Tax Assessor's Office July 2009 the Charter was amended and the debt limit was reduced from 25% of the total assessed value to 5%. 141

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 15 City of Dover, Delaware Revenue Bond Coverage - Electric Revenue Bonds Last Ten Fiscal Years Available Fiscal Gross Operating For Debt Debt Service Requirements of Each Fiscal Year Year Revenue Expenses Service Principal Interest Total Coverage 2014 $ 79,476,865 $ 68,594,189 $ 10,882,676 $ 2,170,000 $ 1,131,854 $ 3,301,854 3.30 2013 90,876,162 68,546,508 22,329,654 2,110,000 1,205,554 3,315,554 6.73 2012 93,650,277 71,607,021 22,043,256 2,060,000 1,260,054 3,320,054 6.64 2011 102,734,764 84,195,802 18,538,962 2,370,000 1,609,192 3,979,192 4.66 2010 100,316,323 86,089,451 14,226,872 2,260,000 1,716,134 3,976,134 3.58 2009 101,562,292 89,853,449 11,708,843 1,840,000 1,753,447 3,593,447 3.26 2008 97,354,991 82,132,360 15,222,631 1,780,000 828,076 2,608,076 5.84 2007 87,606,858 83,006,505 4,600,353 1,730,000 859,048 2,589,048 1.78 2006 68,377,892 53,839,945 14,537,947 1,855,000 910,256 2,765,256 5.26 2005 63,467,514 51,505,300 11,962,214 1,335,000 1,115,728 2,450,728 4.88 Source: City of Dover Financial Records. NOTES 1. Coverage required by the bond resolution is 1.25. 5. In August 2004, the City issued Electric Revenue refunding bonds in the amount of $22,535,000 to refund the 2. Calculation of gross revenue for fiscal year 2013 is as outstanding Electric Revenue Bonds Series 1990 and follows: Electric Revenue Refunding Bonds Series 1993. Gross Revenue: Operating Revenues $ 79,474,753 6. In July 2008, the City issued Electric Revenue bonds in the Interest Earned-Operating Funds 2,112 amount of $22,200,000. Fiscal year 2009 includes $1,026,999 Total Gross Revenue $ 79,476,865 of interest related to this bond issue. 3. Direct operating expenses do not include 7. In November 2011, the City issued Electric Revenue depreciation expense. Refunding Bonds in the amount of $8,810,000 to refund the 2004 Series. This refunding reduced the principal payable 4. Figures presented in this table compare the net revenue by $2,620,000. available for debt service to the debt service requirements of the same fiscal year. 142

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 16 City of Dover, Delaware Revenue Bond Coverage - Water/Wastewater Bonds Last Ten Fiscal Years Maximum Requirements Net Revenue Maximum Direct Available Debt Fiscal Gross Operating For Debt Service Actual Year Revenue Expenses Service Requirement Coverage 2014 $ 13,307,253 $ 9,326,405 $ 3,980,848 $ 1,132,806 3.51 2013 13,282,782 8,841,757 4,441,025 1,019,315 4.36 2012 13,647,145 9,063,553 4,583,592 993,837 4.61 2011 13,758,048 9,222,105 4,535,943 416,423 10.89 2010 11,204,911 10,319,728 885,183 416,423 2.13 2009 11,067,901 9,510,814 1,557,087 797,708 1.95 2008 11,594,402 8,763,407 2,830,995 797,748 3.55 2007 12,294,847 8,242,898 4,051,949 797,748 5.08 2006 12,372,563 7,805,396 4,567,167 1,551,228 2.94 2005 10,619,688 7,223,283 3,396,405 1,553,713 2.19 Source: City of Dover Financial Records. NOTES 1. Coverage required by bond resolution is 1.20. 2. The maximum debt service requirement presented above covers all revenue bond requirements. Rates were increased in 2011 for debt service coverage on multi-year projects. 3. Direct operating expenses do not include depreciation expense for coverage purposes as per the bond indenture. 4. In October 2003, the City issued Water and Sewer Revenue Bonds in the amount of $7,980,000. These bonds were issued to fully defease Water and Wastewater Revenue Bond Series 1986 B and to partially defease Water and Wastewater Revenue Bond Series 1993 and Series 1993 A and to provide approximately $1,600,000 for future capital projects. 5. In Fiscal year 2013, various capital projects were completed. These capital projects were financed by three state revolving fund loans issued in 2009, 2010 & 2011 in the amount of $5.9 million, $2.4 million and $0.8 million respectively, resulting in an increase in debt service. 6. In Fiscal year 2014, the City issued Water and Sewer Revenue Bonds in the amount of $6,125,000. These bonds were issued to refund the Series 2013 Water and Wastewater Revenue bonds and provide $4,005,960 for two capital projects. 143

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 17 City of Dover, Delaware Demographic and Economic Statistics Last Ten Calendar Years Per Capita Personal Personal Median School Unemployment Year Population Income Income Age Enrollment Rate 2014 37,540 $ 788,039,680 $ 20,992 29.8 6,527 6.4% 2013 36,492 821,361,936 22,508 31.1 6,344 9.6% 2012 36,267 828,258,924 22,697 33.2 6,984 9.3% 2011 36,047 818,158,759 22,379 31.3 7,185 9.9% 2010 36,559 712,212,015 19,445 32.9 7,117 10.2% 2009 35,997 712,212,015 19,445 32.9 6,996 10.2% 2008 35,503 702,100,615 19,445 32.9 6,977 5.7% 2007 34,689 675,422,075 19,445 32.9 6,973 3.8% 2006 33,965 660,391,090 19,445 32.9 6,956 2.9% 2005 33,389 658,368,810 19,445 32.9 6,882 3.2% Population Source: Delaware Population Consortium Projection Series Personal Income Source: Estimation based on Population times Per Capita Personal Income Per Capital Personal Income and Median Age Sources: 2011-2013 American Community Servey 3-Year Estimate - Dover, DE Capital School Enrollment Source: includes kindergarten through 12th grade. Unemployment Rate Source: Delaware Department of Labor Statistics adjusted yearly average 144

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 18 City of Dover, Delaware Major Employers Current Year and Nine Years Ago 2014 2005 Percentage of Percentage of Name Numbers of Total City Number of Total City Employees Rank Employment Employees Rank Employment (1) Dover Air Force Base 6,400 1 31.8% 8,900 1 31.2% (2) (3) State of Delaware 4,500 2 22.4% 8,791 2 30.8% (2) Bayhealth Medical Center 3,282 3 16.3% 2,754 4 9.6% Dover Downs Co., Inc. 1,409 4 7.0% 896 7 3.1% (3) Dover Mall LP 1,000 5 5.0% 3,200 3 11.2% Capital School District 1,000 7 5.0% 750 8 2.6% Delaware State University 1,112 6 5.5% 1,150 5 4.0% Kraft Foods Inc. 606 8 3.0% 621 9 2.2% Energizer Personal Care (Playtex Produ 490 9 2.4% 1,105 6 3.9% City of Dover 330 10 1.6% 378 11 1.3% 20,129 28,545 Source: City Economic Development Office NOTES 1. Dover Air Force Base total includes active duty, reservists and civilian employees. 2. Number of employees working in Kent County. 3. Figures estimated by Employer 145

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 19 City of Dover Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Assessor 3.0 3.0 3.0 3.0 4.5 4.5 4.5 3.0 2.0 2.0 City Clerk 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 City Manager 4.0 3.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 3.0 Customer Services 15.0 14.0 14.0 15.0 16.0 16.0 16.0 16.0 14.0 16.0 Delaware Prevention Network - - - - - - - - - 1.0 Facilities Management 7.0 9.0 12.0 13.0 13.0 13.0 13.0 12.0 12.0 13.0 Finance 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 Fire 8.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 5.5 Fleet Maintenance 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 Human Resources 3.0 3.0 3.0 3.0 4.0 4.0 4.0 4.0 3.5 3.5 Information Technology 5.0 5.0 5.0 7.0 8.0 8.0 8.0 8.0 8.0 8.0 Library 13.0 13.0 12.0 17.5 18.0 18.0 18.0 17.0 17.0 17.0 Mayor 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Parks and Recreation 5.0 5.0 6.0 8.0 8.0 8.0 8.0 5.0 5.0 5.0 Police Civilian 31.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 Police Law Enforcement 93.0 93.0 93.0 91.0 90.0 93.0 93.0 91.0 90.0 87.0 Procurement & Inventory aka Central Services 4.0 4.0 6.0 6.0 8.0 8.0 8.0 8.0 8.0 7.0 Public Services, Administration 5.0 6.0 5.0 4.0 4.0 4.0 5.0 4.0 4.0 4.0 Public Services, Inspections 6.0 7.0 7.0 7.0 7.0 7.0 16.0 15.0 15.0 14.5 Public Services, Life Safety 3.0 3.0 3.0 4.0 4.0 4.0 - - - - Public Services, Economic Development 3.0 3.0 3.0 3.0 3.0 3.0 - - - - Public Services, Weed and Seed - - - - - - - - 1.0 1.0 Planning 4.5 4.5 5.0 5.0 6.0 6.0 5.0 5.0 4.0 3.0 Code Enforcement 5.0 4.0 4.0 4.5 5.0 5.0 - - - - Community Development 0.5 0.5 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Public Works, Grounds Maintenance 14.0 14.0 14.0 15.0 16.0 16.0 16.0 16.0 16.0 15.0 Public Works, Sanitation 11.0 11.0 13.0 12.0 13.0 13.0 13.0 13.0 13.0 13.0 Public Works, Streets 8.0 10.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 Public Works E & I - - - - - - - - - 3.0 General Fund Total 270.0 269.0 279.0 289.0 298.5 301.5 298.5 288.0 283.5 281.5 Public Utilities, Electric Administration 3.0 3.0 4.0 4.0 4.0 4.0 4.0 3.0 3.0 3.0 Public Utilities, Electric Engineering 10.0 10.0 10.0 10.0 12.5 12.5 12.5 20.5 20.5 19.5 Public Utilities, Electric System OPS 5.0 5.0 5.0 5.0 5.0 5.0 5.0 - - - Public Utilities, Electric Meter Reading 3.0 3.0 3.0 3.0 4.0 4.0 5.0 5.0 5.0 5.0 Public Utilities, Electric Transmission and Distribu 24.0 24.0 25.0 25.0 28.0 28.0 28.0 29.0 29.0 29.0 Electric Fund Total 45.0 45.0 47.0 47.0 53.5 53.5 54.5 57.5 57.5 56.5 Public Utilities, Construction 3.0 5.0 6.0 6.0 7.0 7.0 7.0 8.0 8.0 8.0 Public Utilities, Wastewater Engineering 5.0 6.0 6.0 6.0 8.0 8.0 8.0 3.0 3.0 - Public Utilities, Wastewater T & D 11.0 10.0 10.0 9.0 11.0 11.0 11.0 11.0 11.0 9.5 Public Utilities, Water T & D 4.0 5.0 4.0 4.0 5.0 5.0 5.0 5.0 5.0 4.5 Public Utilities, Water Treatment Plant 11.0 10.0 10.0 10.0 10.0 10.0 10.0 9.0 8.0 8.0 Water Meter Reading - - - - 1.0 1.0 1.0 1.0 1.0 1.0 Water/Wastewater Fund Total 34.0 36.0 36.0 35.0 42.0 42.0 42.0 37.0 36.0 31.0 Total Full-Time Equivalents 349.0 350.0 362.0 371.0 394.0 397.0 395.0 382.5 377.0 369.0 Source: City of Dover Budget 146

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 20 City of Dover, Delaware Operating Indicators and Capital Assets Used in Operations Last Ten Fiscal Years June 30, 2014 June 30, 2013 June 30, 2012 June 30, 2011 June 30, 2010 June 30, 2009 June 30, 2008 June 30, 2007 June 30, 2006 June 30, 2005 Date of Incorporation Feb. 16, 1829 Feb. 16, 1829 Feb. 16, 1829 Feb. 16, 1829 Feb. 16, 1829 Feb. 16, 1829 Feb. 16, 1829 Feb. 16, 1829 Feb. 16, 1829 Feb. 16, 1829 Land area - Acres 14909.33 14,909.33 14,909.33 14,909.33 14,909.33 14,904.90 14,904.90 14,914.27 14,674.58 14,714.60 Land area - Square Miles 23.29 23.29 23.29 23.29 23.29 22.586 22.586 23.303 22.929 22.991 Total Miles of Street 164.49 164.08 162.81 158.94 159.62 159.62 159.62 155.62 153.76 152.96 City Maintained Miles of Streets 105.14 104.73 103.46 101.59 100.27 100.27 100.27 96.27 94.41 93.61 State Maintained Miles of Streets 53.35 59.35 59.35 57.35 59.35 59.35 59.35 59.35 59.35 59.35 Dover Population - U. S. Census data 37,089 36,047 36,047 36,047 32,043 32,043 32,043 32,043 32,043 32,043 Dover Population - City Count 37,366 36,492 36,267 36,047 36,559 35,997 35,503 34,689 33,965 33,389 Registered Voters 22,779 21,998 22,362 21,454 21,897 21,897 20,181 19,084 19,502 18,714 Electric Utility: Generating Units 4 4 4 4 4 4 4 4 4 4 Co-Generating Unit 1 1 1 1 1 1 1 1 0 0 5 5 5 5 5 5 5 5 4 4 Generating Capacity 175 mw 175 mw 175 mw 175 mw 175 mw 175 mw 176 mw 176 mw 175 mw 175 mw Co-Generating Capactiy 16 mw 16 mw 16 mw 16 mw 16 mw 16 mw 16 mw 16 mw 191 mw 191 mw 191 mw 191 mw 191 mw 191 mw 192 mw 192 mw 175 mw 175 mw Area of Service 68 sq. mi. 68 sq. mi. 68 sq. mi. 68 sq. mi. 68 sq. mi. 68 sq. mi. 68 sq. mi. 68 sq. mi. 68 sq. mi. 68 sq. mi. Substations 15 15 15 15 15 15 15 15 16 16 High Peak Load 164.162 mw 171 mw 172 mw 162.6 mw 164.082 mw 155.656 mw 175 mw 176 mw 160 160 Customers: Residential 19,900 19,990 19,908 19,782 19,785 19,682 19,137 18,578 18,297 17,867 Commercial 3,412 3,412 3,354 3,386 3,370 3,497 3,664 3,422 3,280 2,813 Primary 37 37 39 38 36 37 37 36 32 32 Vapor Lights Only 811 811 811 820 843 850 880 872 867 867 69 KV Industrial 5 4 4 4 4 4 4 4 4 4 Municipal - Total number of meters 0 0 0 0 0 0 0 0 149 149 Total Customers Sales $ $78,179,196 $88,416,208 $91,947,980 $99,513,157 $98,081,648 $99,642,490 $94,037,212 $83,109,810 $63,844,353 $60,170,424 Total Customers Sales kWh 720,874,705 725,895,800 710,327,722 734,102,972 708,530,322 719,949,121 731,024,065 734,072,008 736,810,231 731,635,019 PowerSupply $ $55,822,253 $55,367,147 $58,758,032 $68,852,937 $72,508,956 $73,549,910 $68,648,786 $70,579,991 $42,293,895 $39,628,388 kWh 733,775,177 735,175,000 738,190,000 768,254,000 751,250,000 751,171,000 782,081,000 788,824,000 781,466,220 767,750,050 Fire Department: Stations 2 2 2 2 2 2 2 2 2 2 Officers 8 8 8 8 8 8 8 8 8 8 Firemen - Membership (Volunteers-Active) 160 100 100 100 120 80 100 100 100 100 Equipment 15 15 15 14 14 14 18 14 14 11 147

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 20 – Continued June 30, 2014 June 30, 2013 June 30, 2012 June 30, 2011 June 30, 2010 June 30, 2009 June 30, 2008 June 30, 2007 June 30, 2006 June 30, 2005 Parks and Recreation: Major Parks 3 3 3 3 3 3 3 3 3 3 Small Parks 24 24 24 22 22 22 22 22 22 22 Police Department: Station 1 1 1 1 1 1 1 1 1 1 Substation 0 0 0 0 0 0 0 0 0 0 Uniformed Personnel 94 93 93 93 90 92 92 90 88 87 Automobiles 77 75 78 67 66 66 66 66 71 79 Motorcycles 7 7 7 7 7 7 7 5 5 5 Motor Boats 0 0 0 1 1 1 1 1 1 1 Bicycles 12 12 12 4 4 4 4 4 4 4 Specialty Vehicles 7 7 7 7 7 6 6 6 6 5 Trailers 2 2 2 3 3 3 3 4 4 3 Public Library: Books 100,262 97,801 93,050 103,091 138,931 121,312 119,392 120,203 111,496 101,631 Audiovisual Materials (VCRs, DVDs, CDs, Cassettes, Recorded Books) 21,008 16,929 15,265 14,409 15,572 15,356 11,917 11,507 7,171 10,138 Members 37,531 34,308 32,717 33,466 36,534 39,354 37,587 37,036 39,202 48,626 Magazines Subscriptions 191 187 217 178 201 193 287 359 359 359 Newspapers 10 11 11 19 19 19 29 15 12 12 Circulation of Books 463,113 444,333 407,611 400,130 375,632 428,633 408,827 400,336 398,666 398,842 Electronic Downloads - Books 17,219 11,770 2,635 - - - - - - - Water Utility: Supply - Wells 22 22 22 22 22 22 22 22 22 22 Storage Tanks 6 6 6 6 6 6 6 6 6 6 Total Storage Capacity (Gallons) 3,750,000 3,750,000 3,750,000 3,750,000 3,750,000 3,750,000 3,750,000 3,750,000 3,750,000 3,750,000 Water Mains (miles) 223.15 222.3 217.5 miles 215.7 miles 215.7 miles 215.7 miles 196 miles 176 miles 176 miles 185 miles Average Day (Gallons Pumped) 4,197,984 4,245,153 4,405,923 4,656,334 4,474,063 4,429,115 4,974,526 4,721,174 5,218,000 4,898,000 Peak Day (Gallons) 6,305,000 7,169,000 8,620,000 8,620,000 6,756,000 8,058,000 9,278,000 8,672,000 8,358,000 8,421,000 Water Production (Gallons Pumped) 1,532,264,000 1,553,727,000 1,608,161,895 1,699,562,000 1,633,033,000 1,616,627,000 1,815,702,000 1,869,585,000 1,904,666,300 1,788,000,000 Total Water Consumption (Gallons Billable) 1,374,855,000 1,345,432,000 1,455,934,265 1,539,590,000 1,466,943,000 1,531,526,000 1,554,000,000 1,640,082,000 1,641,119,000 1,580,677,000 Avearge Day (Gallons Billable) 3,766,726 3,686,115 3,988,861 4,218,055 4,019,022 4,195,962 4,257,534 4,493,375 4,496,216 4,330,622 Number of Metered Customers 12,341 12,373 12,385 12,330 13,863 13,375 13,229 11,962 11,764 11,625 Number of New Connections 0 0 55 0 488 146 284 198 139 475 Wastewater Utility: Pumping Stations 40 40 40 42 42 42 42 42 38 34 Wastewater Mains 187.59 miles 186.87 miles 186.87 miles 185 miles 185 miles 185 miles 185 miles 185 miles 185 miles 160 miles Average Day (Gallons Pumped) 3,415,901 4,312,742 4,379,033 4,230,819 5,385,060 4,220,493 4,277,219 4,755,479 4,715,498 5,122,685 Peak Day (Gallons Pumped) Not Measured Not Measured Not Measured Not Measured Not Measured Not Measured Not Measured Not Measured Not Measured 5,983,000 Wastewater Discharge (Gallons Pumped) 1,246,804,000 1,574,151,000 1,602,726,000 1,544,249,000 1,965,547,000 1,540,480,000 1,561,185,000 1,735,750,000 1,721,156,750 1,869,780,000 Wastewater Discharge (Gallons Billable) 17,861,000,000 1,242,238,000 1,316,656,000 1,303,587,000 1,328,195,000 1,410,347,000 1,458,043,000 1,467,498,000 1,460,882,000 1,411,324,000 Average Day (Gallons Billable) 3,415,901 3,403,392 3,607,277 3,571,471 3,638,890 3,863,964 3,994,638 4,020,542 4,002,416 3,866,641 Number of New Connections 0 5 55 0 488 146 Not Available Not Available Not Available 350 Water Treatment Plant: Capacity 4.6 MGD 4.6 MGD 4.6 MGD 4.6 MGD 4.6 MGD 4.6 MGD 4.6 MGD 4.6 MGD 4.6 MGD 4.6 MGD Sales to Customers: Water Fees $4,459,808 $4,551,840 $4,707,918 $4,945,385 $4,274,966 $4,070,523 $4,203,972 $4,250,634 $4,289,413 $3,791,254 Wastewater Fees $3,562,400 $3,564,615 $3,722,985 $3,694,020 $3,015,856 $2,351,885 $2,589,539 $2,619,013 $2,605,428 $2,719,577 Wastewater Adjustment $2,930,333 $2,926,616 $3,050,127 $3,058,656 $3,100,547 $3,733,644 $4,109,166 $3,854,100 $3,865,683 $2,611,290 Sources: Various City departments 148

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 21 City of Dover, Delaware Summary of Insurance as of June 30, 2014 PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS Property Blanket Building & Contents $10,000 Deductible (Special Form, RC, Agreed Amount) $157,343,818 Earthquake $ 2,000,000 $50,000 Deductible Flood Zones X or C $ 2,000,000 $50,000 Deductible Flood Zones (Zones unidentifiable) $50,000 Deductible Zones located A, B Shaded X, V & D are excluded $100,000 Blanket Business Earnings & Expense $200,000 Accounts Receivable $250,000 Civil Authority - 30 days Claims Expense (Inv./Appraisals) $ 25,000 Covered Leasehold Interest $100,000 Debris Removal $250,000 Deferred Payments $ 25,000 Electronic Vandalism $ 10,000 EDP Data & Media $ 50,000 $1,000 Deductible Employee Tools ($2,500 item) $ 25,000 Expediting Expenses $250,000 Exhibitions (Property Damage) $ 50,000 Extra Expense $ 25,000 Fine Arts $250,000 Fire Dept. Services Charge – Included - Fungus, Wet Rot, Bacteria $ 25,000 Furs, Fur Garments $ 25,000 Jewelry, gold, Silver, Platinum $ 25,000 Green Bldg. Alternatives $ 25,000 Loss of Master Key $ 25,000 Newly Acquired or Constructed - Real Property (180 days) $2,000,000 Non-Owned Detached - Trailers $ 25,000 Ord. & Law Coverage A $250,000 Ord. & Law Coverage B $250,000 Ord. & Law Coverage D - Included up to Extra Expense Limit - Outdoor Property $250,000 Outside Signs –Described – Prem. $100,000 Personal Effects $250,000 Personal Property at Undescribed - Premises $ 50,000 Personal Property in Transit out of - Coverage Territory $ 25,000 Pollution & Contaminants $100,000 149

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 21 – Continued PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS Preservation of Property-Direct - Loss or Damage $250,000 Property in Transit $50,000 Personal Property of Others $250,000 Reward Coverage $25,000 Spoilage $10,000 Stamps, Tickets and letters - Of Credit $5,000 Stored Water $25,000 Temporary Location $50,000 Undamaged Parts of Stock - In Process $ 50,000 Valuable Papers on Premises $100,000 Valuable Papers off Premises $100,000 Water Damage Back up of - Sewers or Drains $250,000 Appurtenant Buildings - And Structures $100,000 Overseas Business Travel - Personal Property $ 25,000 Utility Service Direct Damage $ 50,000 Confiscated Property $100,000 Street Lights – Each Item $ 2,500 Street Lights – Per Occur $ 50,000 Street Signs – Each Item $ 2,500 Street Signs – Per Occur $ 50,000 Traffic Signs and Lights –Each $ 2,500 Traffic Signs and Lights - Per Occur $ 50,000 Stadium Lights – Each Item $ 2,500 Stadium Lights – Per Occur $ 50,000 Spoilage Coverage Extension $ 10,000 Sewer or Drain Backup $250,000 Boiler & Machinery Coverage Limit - Property Limit Deductible $ 10,000 Expediting Expenses $250,000 Hazardous Substance $250,000 Spoilage $250,000 Ammonia Contamination $250,000 Inland Marine Contractors Equipment – Replacement Cost - 90% co-insurance Scheduled Equipment $ 3,500 Employee Tools $112,702 Not to exceed $18,000 per item Unlisted Items $100,000 Not to exceed $5,000 per item Leased or Rented Items $100,000 Not to exceed $100,000 per item New Acquired Equipment $250,000 Rental Cost (per Item) $ 5,000 Loss to any one Replacement Item $100,000 150

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 21 – Continued PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS Scheduled Property $54,885 Basic Deductible $ 1,000 Employee Tool Deductible $ 250 Flood Deductible $50,000 Earthquake Deductible $50,000 Windstorm Deductible $ 1,000 Crime Employee Theft per Loss $500,000 $500 Deductible Forgery or Alteration $100,000 $1,000 Deductible Inside the Premises – Theft of Money & Securities $ 35,000 $500 Deductible Inside the Premises $ 25,000 $500 Deductible Robbery or Safe Burglary of Other Property Outside the Premises $ 30,000 $ 500 Deductible Computer Fraud $100,000 $1,000 Deductible Money Orders and Counterfeit Paper Currency $100,000 $1,000 Deductible Faithful Performance of Duty Coverage Endorsement – Governmental Employees Liability Coverage: Commercial General Liability Each Event $1,000,000 General Aggregate Limit $3,000,000 Products Completed Operations Aggregate $3,000,000 Limit Personal & Advertising Injury Each Person $1,000,000 Damages to Premises Rented to You Limit (Any One Premises) $ 100,000 Medical Expenses - Sewer Back Up $1,000,000 (resulting from negligence) Failure to Supply $1,000,000 Sexual Abuse Each Person $1,000,000 Sexual Abuse Total Limit $2,000,000 Statutory Cap Limits of Coverage Endorsement Delaware Each Occurrence Statutory Cap Limit $ 300,000 Employee Benefit Plans Administration Liability - Claims Made Retroactive Date: None Aggregate Limit $3,000,000 Each Employee Limit $1,000,000 Deductible $ 1,000 Law Enforcement Liability - Occurrence Aggregate Limit $3,000,000 151

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 21 – Continued PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS Each Wrongful Act Limit $1,000,000 Each Wrongful Act Deductible $ 15,000 Statutory Cap Limits of Insurance Endorsement Delaware Statutory Cap Limit $ 300,000 Public Entity Management Liability - Claims Made Retroactive Date: 7/1/1996 Aggregate Limit $3,000,000 Each Wrongful Act Limit $1,000,000 Deductible $ 25,000 Employment Practices Liability - Claims Made Retroactive Date: 7/1/1996 Aggregate Limit $5,000,000 Each Wrongful Employment Practice Offense Limit $5,000,000 Deductible $ 25,000 Business Auto Policy Coverage: Automobile Liability $1,000,000 Personal Injury Protection $ 300,000 Uninsured/Underinsured Motorist $1,000,000 (Physical Damage Applies to Police & Specified Electric & Sanitation Trucks) Non-owned Liability $1,000,000 Hired Auto Liability $1,000,000 Employees as Additional Insured Hired Auto Physical Damage $ 90,000 Hired Car Physical Damage Deductibles Comprehensive Deductible $ 250 Collision Deductible $ 250 Statutory Cap Limits of Coverage Endorsement Delaware Statutory Cap Limit $ 300,000 Excess Crime Policy Coverage: Excess Crime Employee Theft per Loss $500,000 excess of $500,000 (Over Policy# 630OB165227) 152

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 21 – Continued PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS Umbrella Excess Liability Coverage: Umbrella General Aggregate Limit $4,000,000 Products & Completed Work Aggregate Limit $4,000,000 Personal Injury $4,000,000 Advertising Injury $4,000,000 Each Occurrence $4,000,000 Retained Limit Any One Occurrence $ 10,000 Or Event Umbrella Underlying Policies: General Liability $1,000,000 Employment Benefits $1,000,000 Auto Liability $1,000,000 Law Enforcement Liability $1,000,000 Public Entity Management $1,000,000 Employers Liability (Safety Net) $1,000,000 Cyber Liability Coverage: Cyber Liability – Claims Made Retroactive Date: 12/01/2012 Aggregate Limit $25,000 Third Party Liability – Each Wrongful $25,000 Act Limit Network & Information Security $ 1,000 Liability First Party Liability Security Breach Notification & Remediation Expenses $10,000 Deductible $ 1,000 Crisis Management Service $10,000 Expenses Deductible $ 1,000 Pollution Liability Coverage: Pollution Liability Each Pollution Event Limit $ 5,000,000 Aggregate Policy Limit $10,000,000 Deductibles $ 25,000 Each Pollution Event $ 100,000 Total For All Pollution Events Deductible $ 10,000 Maintenance Deductible 153

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 21 – Continued PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS Claims Made Retroactive Date 4/1/1997 Includes: 2 underground storage tanks-710 Williams St., Dover, DE & 2 Power Plants Excess Worker’s Compensation Coverage: Employers Liability Limit: $1,000,000 Specific Limit: Statutory Aggregate Limit: $2,000,000 $600,000 Retention (Police) $500,000 Retention (All Other) Worker's Compensation-TPA Services (Charges based on claim count, this number could fluctuate) Travel Accident Policy Principal Sum: $100,000 $0 Deductible Covered Positions: Mayor, Police Captain, Board of Adjustments, Police Chief, City Manager, City Clerk, Asst. City Clerk, Accounting Manager, Tax Assessor, Generation Manager, Police Major, Planning Commission, Human Resources Manager, Information Services Manager, Chief Inspector/ Planner, Chief Electric Engineer, Fire Marshall, Finance Director, Support Services Manager, Line Crew Foreman, Councilman, Administrative Services Manager, Civilian Member of Council Committee, Public Works Manager, Asst. Public Works Manager, Community Services Director, Fire Chief, Library Director, Asst. Inspector/ Director of Planning. Bond-Self Insured Worker’s Compensation - State of Delaware Limit: $750,000 Bond – Public Officials Bond - Donna Mitchell – Treasurer Limit: $100,000 Bond- Public Officials Bond - Traci McDowell – City Clerk/Assistant Treasurer Limit: $100,000 Power Plants – Property & Boiler and Machinery (2 policies 50/50) Locations: McKee Run Generating Plant Vansant Station Policy #1 XL Insurance Company – $50,000,000 per Occurrence (50% Carrier Capacity Limit of $100,000,000) Coverages: 50% policy limit: $50,000,000 Per Occurrence Agreed Amount, Special Extra Expense: $ 2,000,000 Errors & Omissions $ 2,000,000 Expediting Cost: $ 1,000,000 154

2014 Comprehensive Annual Financial Report for the City of Dover, Delaware Statistical Section Table 21 – Continued PROTECTION TYPE OF COVERAGE LIMIT IN DOLLARS Property in the Course of Construction: $ 5,000,000 Earthquake: $20,000,000 Flood: $10,000,000 Debris Removal $ 2,500,000 Property in Transit $ 2,500,000 Demolition & Increase Cost of Construction $10,000,000 Deductibles: $750,000 per Occurrence, except; $100,000 per Occurrence as respects Transit, In respect of Time Element loss (Extra Expense): 45 days per Occurrence, except; 72 hours per Occurrence in respect of Service Interruption Policy #2 Ace American Insurance Company – $50,000,000 per Occurrence (50% Carrier Capacity Limit of $100,000,000) Coverages: 50% policy limit: $50,000,000 Per Occurrence Agreed Amount, Special Extra Expense: $ 2,000,000 Errors & Omissions $ 2,000,000 Expediting Cost: $ 1,000,000 Property in the Course of Construction: $ 5,000,000 Earthquake: $20,000,000 Flood: $10,000,000 Debris Removal $ 2,500,000 Property in Transit $ 2,500,000 Demolition & Increase Cost of Construction $10,000,000 Deductibles: $750,000 per Occurrence, except; $100,000 per Occurrence as respects Transit, In respect of Time Element loss (Extra Expense): 45 days per Occurrence, except; 72 hours per Occurrence in respect of Service Interruption 155

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CITY OF DOVER TRAINING, CONFERENCE & TRAVEL POLICY A. INTRODUCTION 1. Purpose The purpose of this policy is to provide guidelines under which City of Dover employees, public officials, and appointees will be reimbursed for authorized travel expenses incurred in the conduct of business for the City of Dover, hereinafter referred to as “City.” In addition to the guidelines, specific procedures with regard to incurring and reporting related expenses are provided. 2. Scope This policy shall apply to employees of the City of Dover, elected officials, boards, commissions and others, who are engaged in authorized travel and who expend City funds for travel purposes. The Mayor and Members of City Council are not required to submit a Travel Authorization and Completion Form, but are required to follow the financial and budget requirements of this policy. While this policy does not cover every possible situation, it establishes adequate guidelines for employees and officials to make appropriate and consistent judgments regarding the expenditure of City funds for reimbursable expenses. The City of Dover will provide flexibility to meet the special needs and requirements of their employees during travel. It remains the responsibility of city management to control and approve travel-related expenditures. The City Manager and Controller/Treasurer may impose more stringent rules when deemed appropriate or necessary. The City Manager and Controller/Treasurer will review every three years the implementation of this Policy and will provide policy interpretations and assistance to ensure effective and efficient implementation. Any exceptions will be subject to approval by the City Manager and Controller/Treasurer. The City Manager and Controller/Treasurer may also, on a case-by case basis, approve reimbursements exceeding the guideline amounts referenced in this policy. In any such instance, a detailed explanation and substantiation (a receipt) is required. Enforcement of this policy will be the responsibility of the Controller/Treasurer. 3. Responsibility a. Employee, Public Official, or Appointee · Comply with all provisions of this policy. · Obtain the necessary approvals in advance for overnight travel and out-of-state use of City vehicles. Provide a copy of the approval with the travel prepayment made by direct voucher. · All expenses incurred in the course of City business are to be in accordance with the City’s Administrative Policies and Rules of Ethics and must be paid solely from appropriated funds. · Comply with the ten (10) working-day rule. b. Department Director/City Manager/Council Designee · Ensure compliance with this policy.

Training, Conference & Travel Policy Page 2 of 14 · Review and approve each of their employees/official’s travel approval requests and reimbursable expenses. · Ensure sufficient funds are available for all anticipated expenses. c. Signatures on the Travel Expense Report (City of Dover Form 030 Exhibit B) certify that the expenses were incurred by the employee/official requesting reimbursement for official City business, are reimbursable in accordance with this policy, and have not been reimbursed except as indicated on this form. Required signatures for expenses are: · Employee · Supervisor · Department Director or Council Designee B. TRAINING AND CONFERENCE REGISTRATION FEES 1. Request for payment of registration fees shall be accompanied by the registration form. 2. City Council, Planning Commission and the Mayor are offered opportunities to attend courses designed for governmental officials. Any member of Council wanting to take advantage of these courses offered by the following organizations will submit to the City Clerk’s office their request for registration. - Delaware League of Local Governments - National League of Cities - US Conference of Mayors - International City Managers Association - Government Finance Officers Association (GFOA) - American Public Power Association (APPA) - American Public Works Association (APWA) - American Planning Association - Organizations that provide Continuing Education credits for professional license renewals of applicable staff. Any courses not offered by these organizations will be submitted to the City Manager and Controller/Treasurer for concurrence. C. TRAVEL AUTHORIZATION All out-of-state travel that extends beyond one day shall be approved by the City Manager. All requests shall be made on the "Travel Authorization Form” (City of Dover - Form 047 Exhibit A). A copy of the conference or meeting program must be attached to the form. The authorization form must be submitted to the City Manager in a reasonable amount of time prior to the traveling day. The Department Director or City Manager may impose specific requirements as to the time the authorization form must be submitted prior to travel. Employees and Officials traveling on official City business should be aware that the approval is for travel only, and is not a blanket approval of the expenses incurred.

Training, Conference & Travel Policy Page 3 of 14 A travel packet including the authorization form, the meeting program/itinerary, and the purchase orders for advanced costs must be submitted to the Accounts Payable Department. The Purchase Orders for the advanced costs should include the necessary supporting documentation. It does not require the submission of duplicate information. Please note Purchase Orders for registration costs must include the Registration form unless previously submitted; submission for hotel and airfare costs must include documentation of the individual costs unless previously submitted. D. TRANSPORTATION: COMMON CARRIER 1. General All trips requiring the use of common carrier must be pre-approved by the appropriate approval authority. The mode of travel must be justified on the basis of the most economical use of time of the personnel involved, the cost of optional travel modes, and the requirements of the trip. All common carrier reservations must be consistent with reasonable business travel planning, common carrier will be booked at the lowest available fare. If the lowest available fare is turned down by the traveler, the traveler's explanation for the denial is to be provided with the travel authorization request. Travelers should be advised to make travel reservations as far in advance as possible to attain the lowest fares, including non-refundable tickets. Travelers may not specify particular airlines or other carriers to accumulate mileage on promotional plans such as frequent flyer programs. In order to take advantage of special discount rates (supersaver fares, etc.), reimbursement to an employee may be made prior to a trip being taken under the following conditions: a. Documentation of the substantial savings that will accrue to the City (e.g., supersaver discounts). b. Employee's proof of payment on a statement from the airline, other than credit card receipts. Most airlines will not give refunds or partial refunds for supersaver airfares. It is encouraged to examine the advantage of fares requiring early trip departure or delayed return. However, it is important to consider the additional cost of meals and lodging for the required extra day(s) stay when comparing cost. 2. Air Travel a. Accommodations - When commercial airlines are used as a mode of travel, accommodations shall be coach/economy class unless some other class accommodations are more economical. b. Routing of Travel - All travel will be by the most economical and direct routes. In the event that a person travels by an indirect route for personal convenience, the extra expense shall be the responsibility of the individual. Reimbursement for expenses shall be based only on the cost of the most economical and direct route.

Training, Conference & Travel Policy Page 4 of 14 c. Conference Airfare Arrangements When attending a conference, always check conference materials to see if special airline discounts are offered. When a special airline discount rate is offered and conferees are instructed to go directly to an airline to obtain the discount fare, the employee should compare the conference rates through the internet with all other airline rates available before scheduling airline reservations. The employee should always book the lowest fare possible. (See Section F.3. for Conference Lodging Arrangements). 3. Rail Travel 1. Accommodations When it has been determined that rail travel is the most appropriate mode of transportation, the most economical class accommodations shall be utilized. E. TRANSPORTATION: PASSENGER VEHICLES 1. City-Owned Vehicles City-owned vehicles should be utilized for both in-state and out-of-state travel when such use is the most practical and economical mode of transportation, including the cost of tolls, fuel and parking. 2. Use of Privately-Owned Vehicles a. The use of privately owned vehicles for any City travel (both in state and out-of-state) should only be used when a City Vehicle is not available. The use of a privately owned vehicle for City travel shall require the prior approval of the City Manager and Department Director. Reimbursement of private vehicle expenses shall be at the Council approved rate as indicated on Exhibit B for actual and necessary miles traveled. Beginning and ending odometer readings are required for the reimbursement for mileage. b. In considering approval for use of personal vehicles, the approval authority shall take into consideration the cost of alternative modes of travel and the cost of meals and lodging for the additional travel/transit days. Mileage reimbursements shall not exceed the cost of airfare plus travel to/from the airport. c. When two or more employees travel in a privately owned vehicle, only one mileage reimbursement will be allowed at times when one vehicle is sufficient to carry all passengers. 3. Rental Cars a. General The use of a rental car when traveling out of state must be justified as an economical need and not as a matter of personal convenience. Prior approval by the Department Director and City Manager is required before arranging for car rental. All rentals should be at the most economical

Training, Conference & Travel Policy Page 5 of 14 rate per day including government rates or special rate agreements. When traveling in groups, sharing of cars, when practical, must be done to minimize costs. The city will not pay for the use of a rental car to accommodate family members or non-business associates traveling with the employee, public official, or appointee. b. Vehicle Size Whenever possible, compact cars shall be rented or reserved. However, if a larger size vehicle is more economical or more than two city travelers are traveling together the larger vehicle may be appropriate. Any representative of the City requesting an upgrade of the size of a rented vehicle shall provide a written explanation of their reasons to the City Manager. A receipt is always required. c. Insurance (1) The optional insurance coverage offered by the car rental agency must be declined when the traveler charges the rental car. The traveler will automatically receive primary coverage under the City blanket insurance policy for travel. When insurance is declined, the policy covers collision damage, theft, fire and vandalism. Reimbursements for additional or optional insurance coverage will not be allowed. (2) Other. Travelers not covered under the blanket insurance policy may be covered by their personal automobile insurance policy or other personal credit cards. Travelers should check their automobile policy and credit card policy for business travel coverage and accept or decline additional coverage accordingly. Reimbursement for additional or optional insurance coverage will not be allowed. d. Refueling Before Return To avoid a refueling surcharge, all rental cars shall be refueled before returning the vehicle to the rental company. Any surcharges billed to the employee, public official, appointee, or City shall be explained in the reimbursement request. e. Reservations Approved car rental reservations shall be made in advance whenever possible. The employee should compare car rental rates and always look to reserve the lowest rental. F. LODGING 1. General City travelers are expected to seek accommodations that are comfortable, convenient, meet business and personal needs and offer good value. Employees are expected to compare local lodging rates in the area prior to reserving lodging.

Training, Conference & Travel Policy Page 6 of 14 2. Accommodation a. Lodging accommodations for reasonably priced single occupancy rooms are reimbursable when the traveler is away from home overnight due to official travel. b. Accommodations shared with family members or others not on official City business are reimbursable at the single occupancy rate only. c. Accommodations shared with other City travelers should be billed and reimbursed to one traveler. When required, reimbursements to more than one traveler shall be based on a pro rata share as reported on each reimbursement request. 3. Conference Lodging Arrangements When hotel rooms are blocked for a conference, seminar, etc., and a special discounted conference hotel rate provided, the employee/official should compare conference rates with the rates for other local hotels within a three (3) block radius of the conference. The employee is urged to reserve hotel accommodations that offer the best value to the City. This includes conference rate, government rate or lower rate, for the employee/official. If a lower rate is not available, the conferees should make their lodging arrangements directly utilizing the conference instructions. Conference lodging will be considered to accommodate persons with special circumstances. 4. Occupancy Tax The City is exempt from the tax on occupancy of hotel, motel and tourist home rooms within Delaware only. When instate overnight accommodations are necessary, the employee should be provided with a copy of the Occupancy Tax Exemption Certificate (see Exhibit C) to be presented to the lodging facility. Tax on occupancy of hotels in other states must be paid. G. MEAL ALLOWANCES 1. General The City will pay for or reimburse an employee/official for the necessary and reasonable cost of meals and incidental expenses incurred during out of state travel requiring overnight lodging. Additional meal costs incurred over and above those provided as part of a conference or registration fee are not reimbursable, unless justified as a special circumstance and approved by the City Manager and Controller/Treasurer (e.g. special meeting or diet restrictions). Exceptions are to be pre-approved by the City Manager and Controller/Treasurer. There will not be any reimbursement for meals when the meals are provided as part of the conference/training or by the host organization and when meals are provided as part of the hotel service and/or airfare. Only per diem rates as prescribed by the Federal Government for official travel will be provided for Meals and Incidental Expenses (M&IE). (\\doverfp\Public Docs\Policies & Procedures\Travel\FY2015_PerDiemRates.pdf)

Training, Conference & Travel Policy Page 7 of 14 If an employee is traveling partial days on any calendar day, the City will prorate the applicable M&IE rate at 75 percent. This applies to both day of departure and day of return. Partial travel days begin when an employee leaves Dover after 12:00 noon on the day of departure and returns to Dover by 5:00 PM on the day of arrival. When meals are provided at the conference or by the host, the meal allowance will be reduced by 25% for each meal provided. Continental Breakfast provided by the hotel or at the conference is counted as a meal, unless justified as a special circumstance and approved by the City Manager and Controller/Treasurer (e.g. special meeting or diet restrictions). 2. Day Trips, In-state Travel and Before or After Hours The meal allowance for day trips out of the City will be reimbursed at actual cost, as long as it does not exceed 25% of the normal per diem per the M&IE Allowance. The meal allowance for working before or after hours as a general rule are not encouraged, but may be approved by the City Manager and/or Controller/Treasurer on a case-by-case basis. At no time can the amount exceed the allowances established. H. CASH ADVANCES General/Blanket travel advance checks will not be issued to employees, public officials, or appointees. Employees, public officials, and appointees will be reimbursed for specific travel related expenses after the trip or event has been completed. The City will pay specific travel and lodging costs in advance as long as the request deadlines are met. Employees, public officials, and appointees shall use a City purchase order when requesting travel cost advances. Department Directors should use their City credit card for business travel. Directors may approve the use of their departmental travel credit card when arranging employee travel. Under urgent situations and with prior approval, employees and officials can also use a personal credit card and request reimbursement when they return. The City will pay in advance the following costs: Please note: A travel packet including the Travel authorization form, the meeting program/itinerary, and a purchase order for the advanced costs listed below must be submitted to the Accounts Payable Department no later than 12 days prior to the event. a) Conference/Training registration fees. Such payment will be made payable and mailed directly to the organization. This will be done through a purchase order submitted by the department upon receipt of the approved Travel Authorization Form. A copy of the registration form describing the specific event must be attached to the purchase order. The Employee Travel packet must be submitted to Accounts Payable prior to/or along with the purchase order request for advance travel expenses. b) Airfare. Airfare is normally reserved on-line through the internet and paid with a City credit card after travel approval has been received. (See City Credit Card Policy) c) Lodging. Upon receipt of the approved Travel authorization form, the department may submit a purchase order for lodging. The check will be made payable to the hotel and will be given to the person for whom the lodging arrangements are made. The department must provide supporting

Training, Conference & Travel Policy Page 8 of 14 documentation including the daily lodging rates and applicable taxes along with the purchase order. Lodging reservations can be held with the use of a City Credit Card. (See City Credit Card Policy) d) Meal allowance. An advance for the M&IE Allowance, which includes both meals and incidental expenses, will be permitted for meals not provided by the conference or training as indicated in Section G (1) above. Only per diem rates as prescribed by the Federal Government for official travel will be provided for M&IE Allowance. I. TRAVEL EXPENSE REIMBURSEMENT 1. General Travel Expense Report (City of Dover Form 30) is due to Accounts Payable within ten (10) working days after travel or an expense is incurred. (Ten working-day rule) a. Timely reimbursement can be assured only if an accurate, properly substantiated Travel Expense Report is received to Accounts Payable ten (10) working days after completion of the trip. b. Failure to submit timely Travel Expense Reports after the completion of a trip will result in administrative action, such as notification to the Department Director and denial of future travel requests. Travel Expense Reports for local travel and related expenses are to be submitted monthly. In no case shall a reimbursement be made to an employee for travel/conference/training related expenses incurred in excess of 90 days. Note: This section pertains to only those travel expenses paid by the traveler; not to travel expenses directly billed to/paid by the City. 2. Receipt Requirements and Other Reimbursement Criteria a. Tickets booked on common carriers (airline, rail or bus) require original copy of the paid invoice or email confirmation containing total travel costs for arrangements booked on-line. b. Hotel/motel bills shall be the original copy of hotel/motel billing marked paid. c. Ground transportation, including airport shuttle, taxi or public transit requires a receipt. d. Car rental reimbursements require paid invoice from the rental company. e. Meals do not require receipts and are not reimbursable above the maximum daily/partial day per meal allowance. Tips are included in the M&IE Allowance and will not be reimbursed separately. When more than one City employee, public official, or appointee’s meals are being reimbursed, each employee must submit a separate Travel Expense Reimbursement for their allowance. , including a receipt from the dining facility attached. f. Hotel/motel related expenses should be documented identifying the date and the cost for each category with the following requirements:

Training, Conference & Travel Policy Page 9 of 14 (1) Out-of-pocket costs for incidental items such as tips, baggage handling and maid service are not individually reimbursable by the City of Dover. Costs included under this category are included in the M&IE per diem rate. Only per diem rates as prescribed by the Federal Government for official travel will be provided for M&IE allowance. (2) City-business related telephone calls are reimbursable as incurred and require a receipt from the telephone service provider or included on the hotel/motel billing invoice. g. Lodging at campgrounds using traveler’s camper or recreational vehicle is reimbursable at the actual cost, not to exceed the equivalent cost of hotel/motel lodging. Receipt is required. h. Other Reimbursement Categories Reimbursement for the following categories should be submitted on a schedule identifying the date, the cost and the category. All supporting receipts must be attached: 1) The City will reimburse employees for hotel and airport self-parking. The City encourages all employees to seek ‘economy and budget parking’. 2) The City will not reimburse employees for Valet parking, unless prior approval has been granted by the City Manager and Controller. 3) The City will reimburse employees the cost of tolls for interstates, turnpike, bridges and/or ferries. All travel expenses require a receipt. 4) The City will reimburse employees for necessary airport baggage fee. A receipt is required. i. Gasoline and/or Other Supplies require a receipt. Need for emergency repairs incidental to using a City-owned vehicle shall require a Vendor receipt. j. Department Director pre-approval is required to receive reimbursement for Internet Access Costs for city business. These costs must be substantiated with receipts and validation by the Information Technology Department. k. While traveling overnight out-of-state, the City will reimburse employees for the cost of up to two (2) personal telephone calls not to exceed $8 per trip. A receipt is required for reimbursement. l. Reimbursements for travel expenses incurred without required receipts, as outlined, is strictly prohibited. A "no receipt - no reimbursement" policy applies 3. Non- Reimbursable Expenses The City shall not reimburse expenses for the following: a. Alcoholic beverages. b. In-room movies or pay television. c. Theater tickets or nightclub entertainment. d. Laundry. e. Babysitting.

Training, Conference & Travel Policy Page 10 of 14 f. Related expenses of spouse, children and other persons accompanying the authorized employee or official. g. Pleasure, historic or other tour related expenses. Expenses for business related tours would be reimbursed. h. Donations and gifts made while at training, conference, or meeting. i. Loss or damage of personal items. j. Meals for other conference attendees. k. Purchase of personal items. l. Any parking or moving violation fines. m. Any personal or pleasure travel while on City business. J. CHARTER AND CODE OF CONDUCT All City of Dover policies are subject to the City of Dover Charter Part 1, Subpart A, Article II, Section 12 “Compensation and expenses - Mayor and Council and other elected or appointed officials”, whereas, “Members of the council, mayor and other elected or appointed officials shall receive reimbursement for actual and necessary expenses incurred when on official business as prescribed by city ordinance or policy” and; Part II Code of Ordinances Chapter 2, Article 1, Division 4 “Code of Conduct”, which is “applicable to all elected and appointed officials and to all employees of the City of Dover.” K. INTERNAL REVENUE CODE - DEFINITION OF PUBLIC OFFICIAL Generally, if there is any provision in a public law which authorizes the employment of the individual, and the individual is hired or elected under this authority, the individual is considered an employee of the State or political subdivision to which the provision applies. The following factors indicate that an office is a “public office.” The office was created by the constitution or through legislation, or by a municipality or other body with authority conferred by the legislature. The office was delegated a portion of the powers of the government body. The powers conferred and the duties to be discharged are defined either directly or indirectly law or through legislative authority. The duties are being performed independently and without control of a superior power other than the law. The office has some permanency and continuity, and the officer takes an official oath. Examples of public officers are: the president and vice president, a governor or mayor, the secretary of state, a member of a legislative body, such as a state legislature, county commission, city council, school board, a judge, a justice of the peace, and members of advisory boards and committees. L. REVIEW & REVISION The City of Dover Travel Policy will be reviewed every three years by the City Manager, Controller/Treasurer and City Clerk to provide recommended changes to City Council for approval.

Training, Conference & Travel Policy Page 11 of 14 EXHIBITS Exhibit A - COD Travel Authorization Form (Form 47) Exhibit B - COD Travel Expense Report Form (Form 30) Exhibit C - COD Exemption Certificate Form 99A REVISION RECORD Revised: November 24, 2003 Revised: February 9, 2004 Revised: July 24, 2006 Revised: March 23, 2009 Revised: January 23, 2012 EXHIBIT A

Training, Conference & Travel Policy Page 12 of 14

Training, Conference & Travel Policy Page 13 of 14 EXHIBIT B

Training, Conference & Travel Policy Page 14 of 14 EXHIBIT C CITY OF DOVER DEPARTMENT OF FINANCE EXEMPTION CERTIFICATE TAX ON OCCUPANCY OF HOTEL AND MOTEL AND TOUR IST HOME ROOMS In accordance with Internal Revenue Code Section 5253(I), no tax shall be imposed under section 4251 upon any payment received for services or facilities furnished to the government of any State, or any political subdivision thereof, or the District of Columbia. This Part to be Completed by the Operator Name of Hotel, Motel, or Tourist Home Fed. EI or SS number Address City State Zip Code This Part to be Completed by the Occupant This is to certify that I, the undersigned, am a representative of the City of Dover, Delaware; that the charges for the occupancy at the above establishment on the dates set forth below has been or will be paid for by the City of Dover, a government unit; and that such charges are incurred in the performance of my official duties as a representative or employee of the governmental unit. Name (Please type or print) Signature City of Dover 51-6000092 Governmental Unit Tax I.D. # Title P.O. Box 475 Dover DE 19903-0475 Address City State Zip Code Date(s) of Occupancy If additional information is needed, please contact the City of Dover Finance Director at (302) 736- 7018. NOTE: A separate Exemption Certificate is required for each occupancy and for each representative or employee. THIS EXEMPTION CERTIFICATE IS TO BE RETAINED BY THE OPERATORS OF HOTELS, MOTELS, AND TOURIST HOMES AS EVIDENCE OF EXEMPT OCCUPANCY. \\Dover_1\finance\FORMS\DOCUMENTS\FORM99 A.wpd

City of Dover MAYOR AND COUNCIL 1 DRAFT PROPOSED COUNCIL RESOLUTION NO. 2015-01 2 A RESOLUTION PROPOSING THE DOVER PROSPERS INITIATIVE 3 WHEREAS, the City of Dover has a tradition of being friendly to business, having a diverse economy; and 4 5 WHEREAS, we are in a globally competitive environment, which necessitates that we adopt cutting-edge, best 6 practices; and 7 WHEREAS, the Dover has a myriad of incentives which vary throughout the city; and 8 WHEREAS, small businesses are often intimidated by a maze of government requirements; and 9 WHEREAS, several small businesses have made costly errors because of the lack of information; and 10 WHERAS, large employers are attracted by an efficient, cooperative government; and 11 WHEREAS, the economic development office has positive, cooperative relationships with the other city departments 12 and already has the framework necessary to implement this initiative; and 13 WHEREAS, each city department has an ethic of customer service and excellence; and 14 NOW, THEREFORE, BE IT RESOLVED THAT: 15 Section 1. Dover City Council directs the Economic Development Office, the City Manager, and the Director of 16 Planning and Community Development to develop and make available at customer service locations, offices, and via 17 the City of Dover website, a business packet designed to assist start-up businesses with obtaining services and 18 regulatory requirements involved in doing business in Dover. The packet shall include a contact list for all City 19 departments, a list of frequently asked questions, incentive information, and other services to assist prospective 20 business owners. 21 Section 2. Dover City Council directs the City Manager’s Office, Economic Development Office, and Planning and 22 Inspections Department to schedule a series of business focus groups to prioritize improvements needed in Dover’s 23 regulatory process and to work with stakeholders to streamline the regulatory process and update regulations where 24 appropriate to eliminate unnecessary barriers to economic development. The City Manager, Economic Development 25 Manager, and the Director of Planning and Community Development shall provide a quarterly report to the 26 Legislative, Finance and Administration Committee regarding the progress of this effort. 27 ADOPTED: * 28 S:\RESOLUTIONS-PROCLAMATIONS-TRIBUTES\2015\DRAFT\Resolution No. 2015-01 - Dover Prospers-Revised 02-09-2015.wpd 29 30 ROBIN R. CHRISTIANSEN DAVID L. BONAR 31 MAYOR COUNCIL PRESIDENT 32 Actions History 33 02/09/2015 - Scheduled for Introduction at Legislative, Finance, and Administration Committee 34 01/26/2015 - Scheduled for Introduction at Legislative, Finance, and Administration Committee - Meeting Cancelled 35 Due to Inclement Weather

ACTION FORM PROCEEDING: Legislative, Finance and Administration Committee DEPARTMENT OF ORIGIN: Planning DATE SUBMITTED: 1/2/15 PREPARED BY: Ann Marie Townshend, AICP, Director of Planning & Community Development SUBJECT: Certified Local Government Application REFERENCE: N/A RELATED PROJECT: N/A REVIEWED BY: N/A EXHIBITS: CLG Application Materials EXPENDITURE REQUIRED: N/A AMOUNT BUDGETED: N/A FUNDING SOURCE (Dept./Page in CIP & Budget): N/A TIME TIMETABLE: Submission of Application to State Historic Preservation Office by 1/31/2014 RECOMMENDED ACTION: Staff recommends that the Committee recommend approval of the application and forwarding the application to the State Historic Preservation Office, to be accompanied by a letter from the Mayor. BACKGROUND AND ANALYSIS In 1980, an amendment to the National Historic Preservation Act of 1966 established the Certified Local Government (CLG) program to involve local governments in national preservation efforts. Most states, including Delaware, created programs extending CLG status to local communities with a local historic preservation district and a historic preservation commission. The CLG program provides technical assistance to support historic preservation efforts and eligibility for federal Historic Preservation Funds. In addition, localities participating in the CLG program participate in the National Register nomination process for historic properties and are strongly considered for training and technical assistance from the State Historic Preservation Office (SHPO). The 2008 Comprehensive Plan included a recommendation within the Implementation Chapter (Chapter 15, page 179) to “Obtain Certified Local Government (CLG) through the National Park Service.” In November 2013, City Council instructed the Planning Office to compile the CLG application. After a vacancy was filled on the Historic District Commission in Summer 2014, staff was able to compile the information needed to complete the application. Providing the qualifications of Commission members is one of the application requirements. The draft application is attached for review by the Committee and will be presented to the Historic District Commission for their review on January 15, 2015. If recommended by City Council, staff will submit the application to the State Historic Preservation Office along with a letter from the Mayor. This letter will be drafted once the Historic District Commission has taken action on the application. Following the review of the CLG application, the City will enter into a certification agreement prepared by SHPO which outlines the local government responsibilities under the certification.

Division of Historical and Cultural Affairs 21 The Green Dover, DE 19901 T: (302) 736-7400 http://history.delaware.gov/ Delaware’s Certified Local Government (CLG) Program Application Instructions: 1. Local governments must submit this completed application along with the requested materials to be considered for Certified Local Government (CLG) status. For detailed information regarding the CLG Program’s benefits, requirements and procedures, please review Delaware’s Certified Local Government (CLG) Program Guidelines. 2. Typed responses are preferred. 3. SUBMIT APPLICATION TO: Certified Local Government Coordinator Division of Historical and Cultural Affairs 21 The Green Dover, DE 19901 Local Government: City of Dover, Delaware Primary CLG Contact (Optional) Please specify who will be the local government’s primary point of contact for the CLG Program. Name: Ann Marie Townshend, AICP Dawn Melson-Williams, AICP Title: City Planner (Ann Marie) Principal Planner (Dawn) Phone: (302) 736-7196 Email: atownshend@dover.de.us dmelson@dover.de.us

Delaware’s Certified Local Government (CLG) Program Application Mailing Address: City of Dover Department of Planning & Inspections 15 Loockerman Plaza P.O. Box 475 Dover DE 19903 Application Prepared By (Leave blank if same as Primary CLG Contact noted above) Name: --- Title: --- Phone: --- Email: --- Mailing Address: --- Request by Local Government’s Chief Elected Official 1. Attach a signed letter from the local government’s chief elected official requesting to participate in the CLG Program. (check to confirm) Historic Zoning Ordinance (Ordinance): 1. Attach a copy of the local government’s ordinance that allows for the designation and protection of historic properties. (check to confirm) 2. Does the ordinance include each of the provisions outlined in Section III.A of Delaware’s Certified Local Government (CLG) Program Guidelines? Yes / No 2

Delaware’s Certified Local Government (CLG) Program Application Local Historic Preservation Review Commission (Commission): 1. What is the name of the Commission assigned to carry out the provisions of the ordinance? ________City of Dover Historic District Commission___________________________________ 2. Is the Commission responsible for all of the duties outlined in Section III.B of Delaware’s Certified Local Government (CLG) Program Guidelines? Yes / No 3. Does the Commission consist of at least five (5) members? Yes / No 4. Attach resumes for all current members of the Commission that demonstrate their interest, experience, or knowledge in historic preservation. (check to confirm) 5. Do any members of the Commission meet the Secretary of the Interior’s Professional Qualifications Standards outlined in Appendix A of Delaware’s Certified Local Government (CLG) Program Guidelines? If yes, specify the number of Commissioners meeting the applicable fields below: Yes / No ___1__ History _______ Archaeology ___1__ Architectural History ___1___ Architecture 6. Attach a copy of the Commission’s by-laws or rules of procedure. i. Are they publicly available? If so, describe: Yes / No The By-Laws of the Historic District Commission of the City of Dover are available in hardcopy format by contacting the Department of Planning & Inspections Office, City Hall at 15 Loockerman Plaza, Dover, Delaware or phone (302) 736-7196. ii. Do they include a section prohibiting conflict of interest? If so, describe: Yes / No 3

Delaware’s Certified Local Government (CLG) Program Application Specifically within the By-Laws, Section 12 – Conflict of Interest is defined. “A conflict of interest shall at a minimum be any vested interest by a member or a member’s immediate family in a project being reviewed by the Commission or ownership in property by a member or a member’s immediately family that is within 200 feet of a project being reviewed.” Where a conflict of interest exists, the member cannot vote on any Architectural Review Certificate application. iii. Does the Commission hold at least four (4) regularly scheduled meetings per year? Yes / No Survey and Inventory 1. Does the local government agree to maintain a publicly available list and map of locally- designated landmarks and local historic districts? Yes / No 2. If undertaken, does the local government agree to conduct historic property surveys in accordance with the SHPO’s most recent survey guidelines and, upon completion, submit copies of all forms and reports? Yes / No Public Participation: 1. Are the Commission’s meetings announced by public notice with an agenda, open to the public, and conducted in accordance with the Delaware Freedom of Information Act (29 Del. C. §100)? Yes / No 2. Does the local government maintain publicly-available minutes of the Commission’s decisions and actions, including applicable standards and criteria for reaching such determinations? Yes / No 3. Are all of the Commission’s decisions and actions made in a public forum and all affected applicants notified of such determinations? Yes / No 4. Does the local government agree to participate in the review of National Register nominations as outlined in Section III.D.5 of Delaware’s Certified Local Government (CLG) Program Guidelines? Yes / No 4

Historic Zoning Ordinance (Ordinance) The ordinances for the City of Dover that allows for the designation and protection of historic properties are found within the City of Dover Code of Ordinances Appendix B: Zoning Ordinance. The following sections of the Zoning Ordinance as currently adopted are provided as reference:  Zoning Ordinance, Article 3 - District Regulations, Section 21 - Historic district (H)  Zoning Ordinance, Article 8 – Enforcement and Penalties, Section 3 – Duties of the city planner and Section 4 – Violations and penalties  Zoning Ordinance, Article 10 – Planning Commission, Section 3 – Historic district commission and architectural review and Section 4 – Development information requirements  Zoning Ordinance, Article 12 – Definitions (Excerpt of Definitions associated with Historic District activities.) In addition, the Historic District design guidelines and standards document which serves as the guiding document for review of applications for Architectural Review Certification by the City Planner (Staff) and the Historic District Commission is the Design Standards and Guidelines for the City of Dover Historic District Zone. This document is available in a hardcopy format from the Department of Planning and Inspections and in pdf format on the Department’s page of the City’s website www.cityofdover.com. Historic Zoning Ordinances for City of Dover, DE Page 1 of 12

City of Dover Code of Ordinances Appendix B: Zoning Ordinance Article 3 - District Regulations Section 21. - Historic district (H). 21.1 Purpose. The purpose of this historic district regulation is to preserve and enhance that unique character and value of the old portion of Dover as an area of special charm and interest. It is particularly intended that the regulations prevent, in the historic district, any change of conditions that would be deemed to be a disfigurement or degradation of the present unique visual and architectural qualities of the district. 21.2 [Use and bulk requirements.] In the historic district, use[s] and bulk shall be governed by those provisions of this ordinance related to the zone designation of each property, except those aspects of building height, bulk and setback that are subject to architectural review as set forth in article 10, section 3 of this ordinance. 21.3 [Architectural review certificate.] An architectural review certificate shall be required for the demolition, construction, reconstruction, alteration or restoration of any new or existing structure or where general exterior repairs are made within the historic district, as provided in article 10, section 3 of this ordinance. 21.4 [Amendments, supplements and repeals.] The city council shall not take any action to amend, supplement, or repeal the historic district in accordance with article 10, section 5, amendments, without a report by the historic district commission in accordance with article 10, section 3.3, unless the historic district commission fails to render such a report within 75 days after its regularly scheduled meeting following referral by the city council. 21.5 [Signs.] Signs shall meet the regulations found in article 5, section 4, supplementary sign regulations. (Ord. of 3-24-1986; Ord. of 7-26-1993; Ord. of 2-12-2001) Historic Zoning Ordinances for City of Dover, DE Page 2 of 12

City of Dover Code of Ordinances Appendix B: Zoning Ordinance Article 8 – Enforcement and Penalties Section 3. - Duties of the city planner. 3.1 It shall be the duty of the city planner to enforce the provisions of this ordinance and all of the rules, conditions and requirements adopted or specified pursuant thereto. 3.2 It shall be the duty of the city planner to interpret the provisions of this ordinance. Appeals of the city planner(s interpretation shall be heard by the board of adjustment in accordance of article 9 3.3 The city planner shall maintain files, open to the public, of all applications filed, along with plans submitted therewith pursuant to this appendix. 3.4 The city planner shall maintain files, open to the public, of all complaints of violations of provisions of this of this ordinance, as well as any action taken as a result of this complaint. The names of complainants shall not be open to the public. 3.5 The city planner and his duly authorized assistants shall have the right to enter upon any land that is the subject of an application under this appendix during any reasonable hour, as necessary in the execution of the requirements of this appendix. (Ord. of 4-28-2008(2)) Charter reference— Power of city to appoint building inspector and prescribe his powers and duties, subpart A, § 22. Section 4. - Violations and penalties. 4.1 Violation of any provision or requirement of this ordinance or violation of any statement, plan, application, permit or certificate approved under the provisions of this ordinance shall be considered a misdemeanor. 4.2 The owner, general agent or contractor of a building, premises, or part thereof, where such a violation had been committed or does exist, shall be guilty of such misdemeanor. 4.3 Any agent, contractor, architect, builder, corporation or other person who commits, takes part or assists in such violation shall be guilty of such misdemeanor. Historic Zoning Ordinances for City of Dover, DE Page 3 of 12

City of Dover Code of Ordinances Appendix B: Zoning Ordinance Article 10 – Planning Commission Section 3. - Historic district commission and architectural review. 3.1 Historic district commission established. 3.11 Creation and purpose. There shall be a historic district commission for the purpose of assisting the planning commission and city planner in reviewing applications for architectural review certifications as specified in subsection 3.2; and for making recommendations for designation of historic district zones; and for establishing guidelines for the preservation and conservation of historic district zones; and for advising other officials and departments in the City of Dover in matters concerning historic preservation; and for reviewing all proposed National Register nominations in the City of Dover; and for acting as a liaison on behalf of the City of Dover to individuals and organizations concerned with historic preservation; and for carrying out programs of historic preservation education in the City of Dover. 3.12 Appointment. The commission shall consist of five members nominated by the mayor and approved by the city council, who are residents of the City of Dover and who have demonstrated special interest, experience, or knowledge in history, architecture, or historic preservation. Two of the members, to the extent available, shall be professional members representing the professions of architecture, history, archaeology, planning, historic preservation or related disciplines. At least two members shall be residents of the district, and at least one shall represent the business within the district. 3.13 Term. The members of the commission shall serve for three-year staggered terms. Vacancies shall be filled within 60 days in accordance with subsection 3.12. 3.14 Organization. The commission shall meet at least four times per year in a place that is advertised in advance and open to the public and shall keep minutes of its meetings that are available to the public. All review decisions shall be made in public. The commission shall establish bylaws for its general procedure, which shall include a section addressing conflicts of interest. The commission shall produce an annual report of its activity that is kept on file for public review with the city planning office. 3.2 Architectural review certification. 3.21 Effect of architectural review certificate. No building permit or certificate of occupancy may be issued for any structure in the historic district until an architectural review certificate is issued as required under article 3, section 21, subsection 21.3 for the historic district. 3.22 Architectural review certification by the city planner. (A) An architectural review certificate for specific classes of building permits, including fences, signs, siding, window and door replacement, roofing, the addition or replacement of decorative features, minor demolition, residential additions, and other construction of a minor nature, may be issued by the city planner, after a review and determination that the proposed construction is in general accordance with the standards set forth in subsection 3.25. Historic Zoning Ordinances for City of Dover, DE Page 4 of 12

(B) The city planner may refer any permit application for demolition or construction in the historic district for consultation with commission. (C) All decisions of the city planner pursuant to this subsection shall be documented on the building permit. When the city planner grants a conditional approval under this section, all conditions of approval shall be set forth in writing on the building permit. In the event of a denial, the reasons for such denial shall be documented in a written notice of decision which shall identify all elements of the application found to be contrary to the provisions or intent of this section. (D) An applicant may appeal the decision of the city planner to the historic district commission and such appeal shall be considered as an architectural review certification application to the historic district commission and shall meet all of the requirements set forth in subsection 3.23. 3.23 Architectural review certification by the historic district commission. (A) The historic district commission shall issue architectural review certificates for the construction or demolition of single-family and two-family homes, and nonresidential structures or additions involving a gross floor area of 3,000 square feet or less, after review of the proposed construction and after a determination that the construction is in general accordance with the standards set forth in subsection 3.25 below. (B) All applications to the historic district commission for architectural review certification shall be subject to the procedures set forth in subsection 3.26. (C) All decisions of the historic district commission pursuant to this subsection shall be formalized in a written notice of decision. When the commission grants a conditional approval under this subsection, all conditions of approval shall be set forth in writing in the notice of decision. In the event of a denial, the notice of decision shall state the reasons for denial and shall identify all elements of the application found to be contrary to the provisions or intent of this subsection. (D) An applicant may appeal the decision of the historic district commission to the planning commission, and such appeal shall be considered as an architectural review certification application to the planning commission and shall meet all of the requirements set forth in subsection 3.24 and subsection 3.26. 3.24 Architectural review certification by the planning commission. (A) The planning commission shall issue architectural review certificates referred or appealed to it, upon review of the recommendations of the historic district commission and upon a determination that the proposed construction is in accordance with the standards set forth in subsection 3.25. (B) All applications to the planning commission for architectural review certification shall be subject to the procedures set forth in subsection 3.26. (C) All decisions of the planning commission pursuant to this subsection shall be formalized in a written notice of decision. When the planning commission grants a conditional approval under this subsection, all conditions of approval shall be set forth in writing in the notice of decision. In the event of a denial, the notice of decision shall state the reasons for denial Historic Zoning Ordinances for City of Dover, DE Page 5 of 12

and shall identify all elements of the application found to be contrary to the provisions or intent of this subsection. 3.25 Architectural review standards. (A) An architectural review certificate may be issued if it is found that the architectural style, general design, height, bulk and setbacks, arrangement, location and materials and structures affecting the exterior appearance are generally in harmony with neighboring structures and complementary to the traditional architectural standards of the historic district as set forth in the historic district design guidelines and standards adopted by the planning commission and as set forth in the United States Secretary of the Interior's Standards for Rehabilitation. (B) The city planner, historic district commission or planning commission shall not consider normal maintenance and repair (see Definitions, article 12), interior arrangement, or building features not subject to public view. 3.26 Procedures for an architectural review by the historic district commission and/or planning commission. (A) Architectural preapplication meeting. Prior to action on any application for an architectural review certificate, the applicant shall meet in person with the city planner or his delegated representative. The purpose of such conference shall be to discuss the proposed construction or other action requiring the certificate in order to determine what information is useful in the determination of conformity with the provisions and intent of the historic district regulation as expressed in this article. (B) Application and fee. The application to the historic district commission for an architectural review certificate and related information shall be submitted to the city planner at least 30 days prior to the historic district commission meeting at which review is requested and shall be accompanied by a fee as provided for in Appendix F—Fees and Fines. (C) Public hearing. Prior to the review and action on an architectural review certification, the historic district commission shall hold a public hearing subject to the following public notification procedures: (1) The applicant shall advertise the public hearing newspaper of general circulation at least 15 days prior thereto. (2) The applicant shall notify, by mail, all property owners within 200 feet of the extreme limits of the subject property as their names appear on the municipal tax record at least 15 days prior thereto. (3) The applicant shall post a notice outlining the date, time, place, and nature of the hearing in a conspicuous location on the property. Such notice shall be designed in accordance with standards set forth by the planning commission. (4) The applicant shall provide the planning office with a copy of the notice, verification of newspaper publication, a date-stamped photo of the property posting, and post office mail receipts indicating date of mailing for all letters on or before the meeting date. Historic Zoning Ordinances for City of Dover, DE Page 6 of 12

(5) Said notices shall state the date, time, and place of the hearings before the historic district commission, a brief description of the project and shall state that a copy of the application and plan is on file with the planning office for public review. (6) If the planning commission is reviewing a project in accordance with other sections of this article, then the public hearing notice on those applications must also give notice of architectural review certification. (D) Application information. The applicant shall provide such information and documents listed below which will satisfactorily illustrate the proposed action as indicated in the architectural preapplication meeting required in subsection 3.26(A): (1) All plan elements required in subsection 2.5. (2) Plans and specifications indicating existing and proposed development, including structures, architectural elevation drawings, trees and any other landscaping, existing and proposed, including the general design, location and orientation of structures in relation to curb line, right-of-way line and neighboring buildings, colors, and materials to be used on exterior surfaces, detailed plans for any signs, photographs of the existing site and neig