Minutes

COUNCIL WORKSHOP A Council Workshop was held on September 18, 2013 at 6:00 p.m. with Councilwoman Williams presiding in the absence of Council President Bonar. Council members present were Mr. Dixon, Mr. Lynn (arrived at 6:42 p.m.), Mr. Perza (arrived at 6:09 p.m., departed at 6:29 p.m., and returned at 6:41 p.m.), Mr. Hare, and Mr. Hutchison. Mr. Anderson and Mr. Slavin were absent. Council staff members present were Major Bernat, Mrs. Mitchell, Mr. Koenig, and Mrs. McDowell. Mayor Carey was also present. AGENDA ADDITIONS/DELETIONS Mr. Hutchison moved for approval of the agenda as presented, seconded by Mr. Hare and unanimously carried. OVERVIEW OF PROJECTED INCOME AND EXPENSES Mrs. Donna Mitchell, Controller/Treasurer, reviewed the budget balances from the June 2013 Budget Report, noting that the Water Budget resulted in an unfavorable balance of $235,000, which was mostly attributed to the water fees being less than projected. She noted that the Wastewater Budget resulted in a favorable balance of $404,000 more than projected and the balance tracked for the treatment fees (differential from the amount paid to Kent County and what is collected from the customer) resulted in an unfavorable balance of $159,000. Referring to the deficit for the County Treatment Fees that was carried forward from the prior year, estimated at $600,000, she stated that it was projected that an estimated $700,000 would have been collected, resulting in a favorable result; however, since only $609,000 was collected, the deficit was not resolved. Netted altogether, she stated that the result was a favorable balance of $10,000. Mrs. Mitchell noted that the Electric Revenue Fund came in below budget in the amount of $325,000, all attributed to PJM charges and fees, which were $1M unfavorable; however, the favorability in other expenses covered most of those charges and fees. The Electric Revenues came in within $2,000 of what was projected. Mrs. Mitchell advised members that a budget amendment would be presented to City Council for Capital Projects in the General Fund to be carried forward from the previous fiscal year, as follows: 1) Salt Barn; 2) Garrison Oak Infrastructure Project (streets and stormsewer); 3) Streets Program; and 4) Police Parking Lot Repaving. In addition, she stated that there would be carry forward projects for Water/Wastewater, which would be presented by the City Manager later in the meeting. She noted that there would be some carry forward projects for the Electric Fund and, although there was an $880,000 favorability, the Unit 3 Project for the Turbine remained; therefore, it would be necessary to re-budget some of those monies for next year. Mrs. Mitchell reviewed a number of financial spreadsheets that were provided to members, including the General Fund Cash Receipts and Budget Report as of September 15, 2013 for Fiscal Year 2012/2013; All Funds Summary Fiscal Year 2014; Revenue Report for Fiscal Year 2014 as of August 31, 2013; Regional Library Project; Debt Financing Requirements, Schedule for State of Delaware - Office of Drinking Water; Debt Financing Requirements, Schedule for State of Delaware - Delaware Water Pollution Control; Series 2008 Electric Revenue Bonds; and the Water/Wastewater Improvements and Extension Fund - Major CIP Projects (preliminary) as of June 30, 2013 (Exhibit #1).

COUNCIL WORKSHOP OF SEPTEMBER 18, 2013 PAGE 2 Referring to the Unfunded Liability for the Pension Plan, Mr. Hutchison questioned what the City’s annual payment commitment is based on. Responding, Mrs. Mitchell stated that if the City were fully funding the Other Post Employment Benefits (OPEB) Fund, this would amount to $7M each year (based on the last actuarial evaluation) and that the Pension Funds would amount to approximately $3M each year. She noted that when the last actuarial evaluation was done, only the employees participating in the Fraternal Order of Police (FOP) union were contributing 15% toward health care, and once other employees were paying the 15%, a new study should reflect that amount being reduced. Mrs. Mitchell reminded members that in accordance with the City’s Financial Policies, excess budget balances are transferred to the pension funds, which was accomplished last year and resulted in a $7M infusion of cash in the Pension Fund. As a result, she anticipated a change in the actuarial study in this regard. She stated that although the annual numbers should be reduced, she was unsure of the amount at this time. With reference to the police liability for the State’s Pension Plan, Mrs. Mitchell noted that this information was not provided since it is a State Plan; however, the City contributes slightly more than 15% of the payroll, which includes normal and liability costs. Regarding the loss of income, such as real estate transfer tax, Mr. Hutchison questioned what was being done to offset such losses. Responding, Mrs. Mitchell stated that to address the loss for transfer tax, there had been staff reductions and other steps, such as not budgeting for vehicles, street programs, and other projects. Mr. Hutchison felt that staff should educate the entire City workforce regarding the City’s financial issues, for everyone to have a better understanding of all the facts and to gain participation and cooperation in this regard. Mr. Scott Koenig, City Manager, advised members of the difficulty in budgeting certain projects and programs when others are involved with the decision making, such as the State Legislature relative to the Municipal Street Aid monies provided to municipalities. Mrs. Williams stated that she had conducted research and found that those municipalities that have the Payment in Lieu of Taxes (PILOT) were provided much more than $300,000 and noted that some communities were provided as much as $3M to $5M. She felt that PILOT is similar to the unfunded liability and that the City should be receiving much more in the way of PILOT. Responding, Mr. Koenig felt that there should be more communication with the legislative delegation to determine how such an issue could be resolved at the State level since the City could develop a PILOT program for other properties in the State, and indicated that this was the direction in which the City was moving. As an example, he advised members that the development report for the Sheraton property plan noted the City’s expectation to develop a PILOT agreement with the Sheraton since the property would be taken off of the tax rolls if Delaware State University purchases the property, explaining that emergency services would continue to be provided for the property. Mrs. Williams encouraged staff to begin discussions with the State immediately to develop a formula that would increase each year as expenses increase.

COUNCIL WORKSHOP OF SEPTEMBER 18, 2013 PAGE 3 Responding to Mrs. Williams regarding revenues involving the Calpine project, Mr. Koenig stated that there would be some property tax revenue (between $20,000 and $50,000), since Calpine would be taxed only on the building since the land was being leased from the City. He stated that the biggest portion of revenue anticipated was relative to the water system, which was estimated at almost $2M. He noted that there would also be associated wastewater revenue. He explained that the actual increase in water revenue would not be realized in the budget until approximately Fiscal Year 2016. PRELIMINARY REVIEW FOR NEXT YEAR - DISCUSSION OF STAFFING LEVELS, WORKFLOW, AND PROGRAMS - PUBLIC WORKS Mr. Koenig reiterated that the presentation being provided to members was very informal, explaining that the purpose was to provide members with an idea of the focuses that the Department of Public Works had been working on to develop their department and address service levels as requested and/or expected. Mr. Koenig provided a draft Exempt Status list of Public Works Department employees (Exhibit #2). In addition, he provided members with the Fiscal Year 2014 Draft Annual Operating Budget for each General Fund division of the Public Works Department (Exhibit #3). He reviewed the details involving the development of this Draft Budget and explained that focus was on service delivery and becoming the first Public Works Department to receive accreditation in the State of Delaware (and one of the few in the northeast region). He briefly explained the handwritten notes indicating the goals and needs of each division. In reviewing the budget for Public Works - Administration (Page 2 of Exhibit #3) and in response to Mrs. Williams, Mr. Koenig stated that there was no substantial out-of-pocket expense for applying for the accreditation (application fee) and the return on receiving accreditation would be realized in the savings from implementing efficiencies as a result of conducting the internal review associated with the accreditation process. Although the efficiencies had not currently been financially quantified, the Public Works Director felt that getting employees focused on their jobs and building professionalism and dedication would result in efficiencies. Mr. Koenig noted that a major issue involving the Public Work Department was that much of staff’s time was spent “in the field.” The use of the GIS technology had continuously been pulled from the budget for the past couple of years because staff was unsure of the use of the technology, such as how it is applied, how to make the inspectors and field staff more efficient, etc. Moving forward, he stated that staff was going to try to implement technology as it becomes available. In addition, he stated that a part of this effort would meet the asset management requirements of the Finance Department, noting that a great deal of inventory, including large water, sewer, street, and storm sewer systems, as well as inventory such as ditches that are not included in an asset management system. He stated that buildings are not included in an asset management system. Instead of proactively considering the replacement of a roof, he stated that staff tends to react, which drives up the costs since these needs are not being planned; however, utilizing GIS technology as an asset management tool, staff would be able to take a proactive approach.

COUNCIL WORKSHOP OF SEPTEMBER 18, 2013 PAGE 4 Mr. Koenig advised members that the inclusion of training and certification for all divisions of the Public Works Department would be a constant. He explained the importance for the City to provide the opportunity for all departmental directors to attend national conferences to learn from other directors and bring information back, with the expectation that they would transfer the knowledge to other City department heads and City Council. He stated that there are certification and license requirements beginning to be implemented; therefore, there was need for training and education. He explained that the City would budget for the training and education, with the understanding that staff would participate and demonstrate that it is beneficial. Referring to the budget for Public Works - Fleet Maintenance (Page 3 of Exhibit #3), Mr. Koenig reminded members that at one time the entire division was fully privatized, subsequently all functions were brought back in-house, and currently there was a combination of privatization and in-house functions. He indicated that staff was prepared to make an offer to a Field Supervisor who would oversee both fleet and facilities employees and be responsible for adding a professional level to the Fleet Maintenance Shop. In order to maintain the details regarding the City’s fleet, which currently consists of 188 vehicles and 48 pieces of equipment, he stated that it would be necessary to utilize technology. In response to Mrs. Williams, Mr. Koenig stated that the police vehicles and Fire Department vehicles are not serviced by the City’s Fleet Maintenance staff. Clarifying, Mrs. Mitchell stated that the maintenance of the police vehicles is outsourced under the State’s contract. Mr. Koenig referred to Public Works - Facilities Management (Page 4 of Exhibit #3) and advised members that attempts were being made to make all City buildings more energy efficient and anticipated that the costs for electricity would be reduced. As employees have retired, the amount for contractual services had increased due to the City privatizing custodial services at several buildings including the Warehouse, Pitts Center, and Electric Administration, with 5 East Reed Street utilizing a combination of both in-house staff and contractual services. As more of the employees in this division retire, he stated that a decision would have to be made as to whether or not the City wishes to expand contracts for privatization of this service or hire personnel. Mr. Koenig reiterated the need for all departments to utilize asset management software. The idea would be to begin considering how to set aside funds for maintaining the City assets to avoid big “spikes” in the budget. Referring to Public Works - Grounds (Page 5 of Exhibit #3), Mr. Koenig stated that this division had gone through some transitions, explaining that some of the grass mowing services were privatized, employees had resigned, and other employees had to take medical retirement. Due to the shortage of employees, in August, the grass mowing contract was expanded; however, he stated that there had not been a full “growing” season for that contract. He advised members that there were several complaints from residents regarding their disappointment in the aesthetics of the parks related to grass mowing, particularly in regard to the trimming around trees, concrete, etc. He explained that it would take another year before the City would be able to fully evaluate the privatization of the grass cutting and that the City’s expectations should be included in such contracts in the future. Mr. Koenig stated that he was not happy with the appearance of the City parks either and felt that the City needed to figure out ways to increase the curb appeal of the City’s parks and public spaces.

COUNCIL WORKSHOP OF SEPTEMBER 18, 2013 PAGE 5 With regard to the gasoline expenses, he explained that as more areas are transferred to contractual services for grass mowing, the City would mow less, which should result in a decrease in gasoline expenses; however, he noted that the expenses for contractual services would increase. Mr. Koenig advised members that Mr. Bill Cooper, Grounds Superintendent, had announced that he would be retiring after 35 years of service; therefore, there would be a new supervisor coming on board. Regarding Public Works - Sanitation (Page 6 of Exhibit #3), Mr. Koenig stated that he was once an extreme advocate for sanitation being an enterprise fund; however, his accounting dissertation during the past few years had led him to the conclusion that it should serve as a service fee rather than a separate enterprise fund. He explained that the City’s sanitation service is primarily a residential service and that the system is set up best to pickup residential containers. Although the City currently provides service to numerous commercial customers, moving forward, there was a plan to reduce the number of commercial customers as sites are redeveloped. During the Development Advisory Commission (DAC) review process, when it is determined that a site exceeds the City’s ability to collect waste, the developer would be notified to design the site for private trash collection and the occupant would become a private customer rather than a City customer. He stated that a site may exceed the City’s ability for collection as a result of screening requirements, explaining that private sector collectors open dumpster enclosure doors but the City does not. Additionally, there are commercial customers whose needs are beyond what the City can provide, such as providing an eight (8) yard dumpster or a more convenient pickup time. Mr. Koenig stated that the budget for sanitation contractual services included landfill fees and the recycling contractor. He noted that the recycling contractor extended the contract for Fiscal Year 2014 with no increase; however, the contract would be rebid this year for Fiscal Year 2015, so an increase would be a possibility. As the economy rebounds, he advised members that the amount of trash put out increases. He noted staff’s concern regarding an increase in trash because the Delaware Solid Waste Authority (DSWA) contract includes an increase in the tipping fee each year for the next couple of years, which, if the tonnage stays the same as last year, would equate to a $30,000 to $40,000 increase. In regard to the expense for gasoline for the Sanitation Division, Mr. Koenig indicated that the trash trucks get only approximately four (4) miles per gallon. Although attempts would be made to minimize these expenses by increasing communication between the truck drivers and office staff and establishing more efficient routes, substantial savings were not anticipated because the City would continue to provide the expected level of customer service (e.g. responding to customer calls by sending drivers back out to pick up a container that was not put out in time for the original pick up). Responding to Mr. Hare regarding recycling, Mr. Koenig stated that the City collects approximately 15 pounds per location, per month. Although the City loses money as a result of the recycling program, he explained that the program provides a benefit to the environment and reminded members that recycling was a State mandate.

COUNCIL WORKSHOP OF SEPTEMBER 18, 2013 PAGE 6 Mr. Koenig advised members that staff was currently reviewing possibilities for improving ways to address yard waste. He stated that the City had been working with Delaware Department of Natural Resources and Environmental Control (DNREC) on a pilot project regarding composting at Schutte Park, where the City takes yard waste and, under DNREC’s supervision, determines if it can be prevented from having to be dumped at the landfill. A test was scheduled for this fall and would last for a 60 day period, at the conclusion of which staff woulddetermine if it should be turned into a long-term project. Referring to Public Works - Streets (Page 7 of Exhibit #3), Mr. Koenig advised members that there were compliance issues associated with this division which would need attention. He explained that the City had not obtained the necessary permits relative to MS4 (Municipal Separate Storm Sewer Systems) compliance. The City would be forced to improve the storm sewer program, both administratively and on the street, recording all items during the next few months. Mr. Koenig anticipated that matters would be presented to City Council in the next budget for an expense related to MS4 compliance. He stated that the issue regarding flood plain management was tied to MS4 compliance, explaining that the flood maps were becoming more tied to Federal Emergency Management Agency (FEMA) reimbursements and other emergency management issues. Currently, the flood plain maps were maintained by the Planning Department; however, he anticipated that they would be made a part of the Public Works Department since they would become a part of the GIS system. Mr. Koenig indicated that although the Silver Lake Dam is a small dam, it is considered a high risk category because if the dam breaks, it could affect houses. Therefore, a five (5) year inspection is required on the dam by a third party, which would equate to a $7,000 to $10,000 expense that would be included in the budget for next fiscal year. Having an understanding that there was a desire for this workshop to provide possibilities for improving the budget, Mr. Koenig stated that it would be very difficult to cut the budget in the Department of Public Works due to numerous issues related to compliance, service delivery, and infrastructure that would make it nearly impossible to cut costs without changing the level of service. Mr. Koenig reminded members that, during the Special Council Meeting (Budget Review) of May 29, and June 5, 2013, it was estimated that the City should be spending $1M to $1.5M every year on street maintenance. He explained that Public Works was a large department with many expenses but that the amounts budgeted provide the bare level of services that help make the City of Dover the city that it is. He reminded members that the number of employees had been reduced and other budget items were eliminated or reduced as much as possible to allow the department to continue to maintain the current level of services and to achieve or maintain compliance. In response to Mr. Hutchison regarding brown water problems, Mr. Koenig noted that almost every year, the Water/Wastewater Budget included approximately $1M for water quality improvements (pipe replacement) and $1M for inflow/infiltration improvements. He advised members that no specific water quality projects were budgeted in the current fiscal year, since the City funneled a substantial amount of money into the Garrison improvements and planned to catch up on other projects that were “pushed out” during the previous fiscal year, such as the replacement of the Piney Point Well. He stated that many of the brown water complaints were related to instantaneous “hits”

COUNCIL WORKSHOP OF SEPTEMBER 18, 2013 PAGE 7 on the system, from the Power Plant going on and off or a fire in the system, which create flow reversal and result in a burst of brown water. In talking to engineers in other larger, older cities such as Baltimore, Wilmington, Philadelphia, etc., he stated that they have these same types of issues. He noted that there were some areas in the City that experience more of a problem than others and that the replacement of piping appeared to solve many of these types of issues. He explained that the City was conducting a project which included a combination of line replacement and water main relining, noting that relining is a complicated project but in some instances can be less expensive. He stated that in the modeling of the City’s system, it had been discovered that many pipes installed in the early 1900s were undersized and unable to carry standard fire flow. In these instances, the relining of a four (4) inch water main would not serve the City since the model indicated that a six (6) or eight (8) inch pipe was required. He assured members that this would be an ongoing project that would be included in perpetuity, with a minimum of $1M budgeted each year for the renewal and replacement of water lines. Mr. Hare advised members of a flooding problem in the Woodbrook Subdivision, explaining that every time it rains, the pond backs up and floods residents’ basements. Responding, Mr. Koenig indicated that drainage issues were beginning to mount and advised members that a lot of work for the State Conservation District was currently under contract and scheduled to begin; however, the problems with ditches and ponds would require additional monies. He reminded members that stormwater management ponds became the standard a little over 20 years ago and some that are owned by the City were beginning to fail. He stressed the need for the City to improve maintenance on ditches, ponds, etc.; however, he stated that these types of improvements are time consuming and can be costly. He warned members that when this work begins in their district, they will know because they will receive complaints from constituents due to the fact that private property must be accessed to conduct the maintenance. Mr. Hutchison stated his understanding that the improvements on Governors Avenue and near Lynnhaven Drive would have addressed most of the flooding problems from Water Street to Bayhealth. Responding, Mr. Koenig stated that the improvements helped the Puncheon Run; however, they did not help flooding problems at Bayhealth. He stated that the City had applied for a planning grant at the Department of Natural Resources and Environmental Control (DNREC) to study the Tar Ditch basin. He indicated that it would cost an estimated $10M to $15M to upgrade the storm drain system, dig through the old Public Works site, remove the contamination area, and abandon and restore the old Public Works site. Mr. Koenig provided members with the Fiscal Year 2014 Draft Annual Operating Budget for each division funded by the Water/Wastewater Fund in the Public Works Department (Exhibit #4). He reviewed the details involving the development of this Draft Budget and explained the handwritten notes indicating the goals, needs, and/or desires within each division. Referring to Public Works - Water Treatment Plant (Page 2 of Exhibit #4), Mr. Koenig reminded members that when Calpine comes on line, there will be a need to expand staff, which would take place during the FY2015 Budget. He explained that the budget reflected the costs associated with running the water treatment plant on Long Point Road, the 22 wells that feed the system, and the six (6) elevated storage tanks, with an additional two (2) tanks planned for the future.

COUNCIL WORKSHOP OF SEPTEMBER 18, 2013 PAGE 8 With reference to Public Works - Water Management (Page 3 of Exhibit #4), Mr. Koenig stated that there are approximately 200 miles of water pipe in the system, which had been categorized by type, and that staff was attempting to determine during which years the work would be completed; however, there was a constant need to obtain information for inclusion in the asset management database. He advised members that although the City had a high-quality water system, there are issues with asbestos pipe and galvanized water services. He explained the importance of the distribution system maintenance (renewals and replacement) in order to maintain the quality of the water system. Mr. Koenig referred to Public Works - Waste Water Management (Page 4 of Exhibit #4) and advised members that when there is a heavy rainfall, a lot of effort is put forth with managing the waste water system to prevent spills, overflows, etc., which involve contractors (pumping out systems) as well as employees. He indicated that industrial sampling and lab analysis would be required to ensure the City is complying with the industrial permits associated with waste water with the County. Mr. Koenig stated that Public Works - Water Construction (page 5 of Exhibit #4) was the in-house construction unit, explaining that when there are water quality projects in residential areas, these employees perform some of the water line replacement work. He stated that staff was reviewing this division closely to ensure that such in-house work was being performed within a reasonable cost. He stated that although it was beneficial to have a crew available to do such work, it was not staff’s desire to have it accomplished at a higher cost than if the work was contracted. Referring to Public Works - Water Treatment Plant (Page 6 of Exhibit #4), Mr. Koenig reiterated that it would be necessary to have an employee dedicated to the MS4 and storm water permit in the future. His stated that a new position for either a civil engineer or environmental scientist would be requested in the next budget to address the MS4 and industrial permits, explaining that the City needed an employee that can be dedicated 40 hours per week to ensure the City was making progress toward compliance in this regard. This employee would also serve as the key person for the flood plain and Silver Lake Dam management. Mr. Koenig reviewed the Water/Wastewater Improvement and Extension Fund - Major CIP Projects (Preliminary) as of June 30, 2013 (Page 11 of Exhibit #1), stating that he was very happy with the progress that was made on these projects, especially while being short of staff. He explained that many projects had been completed; however, there were numerous projects which still needed to be completed in order to “catch up.” Going into Fiscal Year 2015, he stated that staff had discussed budgeting $1M or more for the Street Program, $1M for water quality, and $1M on Inflow and Infiltration (I & I). The current budget included funding for I & I and water quality and staff would be requesting funds for the Street Program. In regard to water and sewer, it was his opinion that the City was in a good position to maintain the capital plan and address asset management and the compliance issues, as discussed. However, he stated that the reductions to the General Fund were becoming evident to members as well as constituents, and that staff and Council would need to reevaluate and determine what level of service to maintain. In order to achieve and maintain the level of service that he would like, funds would need to be budgeted.

COUNCIL WORKSHOP OF SEPTEMBER 18, 2013 PAGE 9 Mrs. Mitchell advised members that the spreadsheet was dated June 30, 2013 and did not include the budget amendments approved by City Council in July for the Garrison Oak Project; therefore, it reflected the original $2M for the water rather than $4.2M, and $2M for the sewer rather than the $3.5M that was since approved. Since these amounts were increased, she reminded members that the water quality and the I & I funds were eliminated from the FY2014 Budget to make up the difference. Responding to Mrs. Williams, Mr. Koenig stated he would not be proposing any additional funding in FY15 over what was in the FY14 budget and the water and sewer model. For clarification, Mrs. Williams questioned what amount would be necessary in order for the City to maintain the infrastructure and service level. Responding, Mr. Koenig estimated that the Water/Sewer Fund was approximately $15M and explained that the majority of the revenues received are used for operations and capital for the Water/Sewer Fund, with a $500,000 transfer to the General Fund. In response to Mrs. Williams, Mrs. Mitchell stated that the Water/Sewer CIP is approximately $2M per year for water and $2M per year for sewer, explaining that more than $500,000 is attributed to the cost of equipment replacements each year. She stated that maintaing the status quo for the General Fund would require approximately $1.7M; with approximately $1M to $1.5M for the Street Program and $700,000 for the purchase of police and other vehicles. It was her opinion that combined, the General Fund and Water/Sewer Fund would need a minimum of $1.5M to $2M additional funding in order to maintain or improve the City’s current service levels and assets. In response to Mr. Hare, Mr. Koenig stated that currently, the State does not provide the City of Newark a payment in lieu of taxes (PILOT). He advised members that the PILOT Program is spread out between Wilmington, Dover, and Georgetown. Mr. Hutchison stated that the City of Dover is unique because it is the Capital of the State of Delaware, and noted that there are many exempt buildings within the City. With the City receiving only $317,000 from the State of Delaware for PILOT, he suggested negotiating with the State to provide additional PILOT monies. Mrs. Williams advised members that the City of Rehoboth Beach receives funding for State maintained roads. She stressed the need for developing creative ways and means of collecting revenues for the City. Mr. Koenig explained that staff had been conscious of managing the operating budgets. He advised members that staff had been receiving feedback from citizens regarding their disappointment in the level of service that had been provided by the City recently. As a result, he stated that members of Council need to determine if the current level of service was desired or if amendments and adjustments should be made that would allow the City to get back to the level of service that was provided for many years. Mr. Koenig stated that the presentation provided included those items staff felt would be necessary to budget in order to meet compliance issues, service delivery issues, and what was interpreted as the message that had been provided by City Council. Understanding that there was a cost involved, he stated that it would take between now and May of next year to begin developing those costs.

COUNCIL WORKSHOP OF SEPTEMBER 18, 2013 PAGE 10 Should there be an item that had been presented by staff that members did not wish to consider, he requested that staff be advised so that they know what should be done moving forward. With reference to the $7.5M deficit in the General Fund Budget that needed to be addressed over a three (3) year period, he stated that the budget could not be cut to meet that balance and relayed concern that the budget had been cut in certain areas that had marginalized service delivery. He explained that the items included in the presentation (addition of positions and additional funds for programs) were not included in the $7.5 deficit; therefore, if those items were included in the budget, the deficit would increase. Mr. Lynn noted that the PILOT Program was a part of the Comprehensive County Seat Relief (CSR) Package. For FY2013, the projected PILOT Program for the City of Wilmington was $2.1M and their total CSR was $7.7M. He suggested that the City Solicitor’s Office be requested to review the statutory language in the CSR Act to assure that the amounts provided were computed correctly and if the City would be within their rights to request some type of meeting with the State to re-negotiate the City’s CSR. He reminded members that the State viewed the City of Wilmington as the State’s Capital and viewed the City of Dover as the Capital in name only, which had and continued to create problems. Mrs. Mitchell advised members that she had the calculations used in determining the amount provided to the City because she had questioned their calculations last year. At the request of Mr. Lynn, she offered to provide this information to members. In reviewing the Fiscal Year 2013 Budget for the City of Wilmington, Mr. Lynn noted that $2.1M was included for PILOT, $4.47M for State UCC filing fee, $300,000 for the Statutory Trust Filing fee, and approximately $850,000 for New Castle County Corporate filing fees. He stated that Wilmington’s CSR Package increased by approximately $300,000 last year, which was almost as much as the City receives in PILOT alone. Mrs. Mitchell noted that the $2.1M for PILOT was a decrease, explaining that this appropriation had been as high as $3M in the past. Responding, Mr. Lynn stated that the City of Wilmington did not lose money since the total CSR Package was over $300,000, noting that the difference was made up by the UCC filing fee. Mr. Hare advised members that the University of Delaware did provide some type of PILOT to the City of Newark. He suggested that Delaware State University provide something similar for the City of Dover. Although he agreed that something should be done in this respect, Mr. Koenig stated that the University of Delaware has a much bigger influence on the City of Newark than Delaware State University has on the City of Dover. Mrs. Williams suggested that a formula be developed that would allow for all non-profits to contribute, according to their budgets. Mr. Lynn questioned if staff could provide the ratio of land space to compare the University of Delaware with Delaware State University in this respect. Mayor Carey announced that the Police Department was currently evaluating their needs for equipment and manpower and that an update would be provided to members of City Council once a plan was finalized.

COUNCIL WORKSHOP OF SEPTEMBER 18, 2013 PAGE 11 Mr. Hare moved for adjournment, seconded by Mr. Lynn and unanimously carried. Meeting adjourned at 7:51 p.m. Beverly C. Williams Acting Council President BCW/TM/jg S:\AGENDAS-MINUTES-PACKETS\Council-Minutes\2013\09-18-2013 Workshop.wpd Exhibits Exhibit #1 - Financial Spreadsheets Provided to Members by Mrs. Donna Mitchell, Controller/Treasurer Exhibit #2 - Draft Exempt Status List of Public Works Department Employees Exhibit #3 - Fiscal Year 2014 Draft Annual Operating Budget for each Division of the Public Works Department - General Fund Exhibit #4 - Fiscal Year 2014 Draft Annual Operating Budget for each Division of the Public Works Department - Water/Wastewater Fund

EXHIBIT #1 Council Workshop of 09/18/2013

EXHIBIT #2 Council Workshop of 09/18/2013 EXHIBIT #2 Council Workshop of 09/18/2013

EXHIBIT #3 Council Workshop of 09/18/2013

EXHIBIT #4 Council Workshop of 09/18/2013