Minutes

COUNCIL RETREAT A Council Retreat was held on March 22, 2013 at 3:00 p.m. with Council President Leary presiding. Council members present were Mr. Anderson (arrived at 3:06 p.m., departed at 3:38 p.m., returned at 3:43 p.m., departed at 5:19 p.m., returned at 5:21 p.m. and departed at 5:42 p.m.) , Mr. Dixon (departed at 3: 27 p.m. and returned at 5:03 p.m.) , Mr. Lynn (arrived at 4:07 p.m.) , Mr. Bonar, Mr. Hare, and Mr. Hutchison. Mrs. Williams and Mr. Perza were absent. Council staff members present were Mr. Koenig, Mrs. Mitchell, Police Chief Hosfelt, Mrs. Townshend, Ms. Russell, and Mrs. McDowell. Mayor Carey was also present (departed at 5:33 p.m., returned at 5:34 p.m., departed at 5:36 p.m.) . AGENDA ADDITIONS/DELETIONS Mr. Bonar moved for adoption of the agenda as submitted, seconded by Mr. Hutchison and unanimously carried. INTRODUCTION Mr. Scott Koenig, City Manager, reminded members that in previous years, during the Council Retreat, members would review strategic goals, financial matters, etc.; however, during the past two (2) years, focus had been given to finance in an attempt to balance the budget. He explained that during this year’s Retreat, members would be provided an update on the Quarterly Revenues and preliminary Budgets as well changes in staffing levels. In addition, he stated that staff requested members to relay their concerns and desires as the budget for FY2014 is developed. He advised members that meetings had been held with individual departments reviewing their draft budgets and that the initial iterations of determining if their requests are “needs” or “wants.” QUARTERLY REVENUE UPDATE - FY13 AND FY14 - GENERAL FUND, WATER/WASTEWATER FUND, AND ELECTRIC FUND Mrs. Donna Mitchell, Controller/Treasurer, reviewed the Revenue Reports through February 28, 2013 (Exhibit #1), which included FY13 and FY14 forecasts for the General, Water/Wastewater, and Electric Funds. Responding to Mr. Anderson, Mrs. Mitchell confirmed that the projections for the Water/Wastewater for FY13 and FY14 reflect no volume growth. Elaborating, Mr. Koenig stated that there is little to no residential growth and that there had been a decline in industrial and commercial use of utilities. In June 2015, when the Calpine plant is scheduled to come on line, if those forecasts hit the demand as indicated, there will be a significant increase in water revenue in the amount of approximately $1.5M-$2M per year due to the high demand for the facility. Mr. Koenig noted that, as with many local governments, the City’s Budget is substantially driven by the City’s residential and commercial growth. In reference to the transfer from Civil Traffic Penalties Fund in the General Fund (Line 15), which are monies received from the Red Light Camera Program, Mrs. Mitchell stated that the revised projection for FY13 had been decreased due to a major camera not functioning for a period of time. She stated that the decrease in the projection for FY14 considered that drivers would become accustomed to the cameras, resulting in a decrease in the number of drivers running the lights.

COUNCIL RETREAT OF MARCH 22, 2013 PAGE 2 In response to Mr. Bonar, Police Chief Hosfelt stated that the red light camera that was not functioning for almost the whole year was located at Route 13 and White Oak Road. He stated that a vendor is responsible for ensuring that the red light cameras are operating and that Delaware Department of Transportation (DelDOT) holds that contract. He stated his understanding that DelDOT officials reviewed the contract and would not be pursuing red light cameras that were not functioning. Chief Hosfelt stated that the vendor was American Traffic Solutions (ATS), which had been bought out by a new company who has installed new cameras at different locations. Chief Hosfelt indicated that he was not sure of the amount the City is provided from the $113 collected for each red light camera. Mr. Koenig recalled that the City receives the majority of the monies (between $50-$75). PRELIMINARY FY14 BUDGETS - GENERAL FUND, GRANT FUNDS, WATER/WASTEWATER FUND, AND ELECTRIC FUND Mrs. Mitchell reviewed the 2013-2014 Fund Summaries (Exhibit #2), noting that the General Fund Budget currently had a shortage of $718,500. Referring to the Electric Revenue Fund, she explained that there was an excess carry forward, due to favorable power supply costs in the amount of $12,379,200 this year. If this carries forward to the next year, she stated that it will total $20,580,000. She stated her desire to discuss the possibility of providing an adjusted rate (lower) or a Power Cost Adjustment (PCA) credit with Mr. Ted Kelly, Senior Project Manager, Burns & McDonnell, who conducted a rate study for the City. She explained that the five (5) year forecast should be completed prior to making a final decision in this regard. Mr. Koenig advised members that the favorable costs were the result of changes made to the City’s hedge program, explaining that some very expensive hedges that had started to come off and the repurchase of those hedges is less expensive. In addition, he stated that the actual percent of hedges was at 85% at one time, and now is approximately 60%-70%, and the City had dropped a percentage in the portfolio of the hedges; therefore, the City was buying more on the spot market, which was quite a bit more favorable. For further clarification, Mrs. Mitchell provided members with the Electric Power Supply and Generation Trends for FY12 Budget and FY13 and FY14 Forecasts (Exhibit #3) and noted that the FY13 Revised amount was $8.5M and the FY14 Forecast was $5.8M, which was favorable compared to last year. Mr. Koenig indicated the complexities of the energy purchase markets as well as the PJM. Mrs. Mitchell advised members that some large utility customers had questioned future rates and that she indicated no change in water/sewer rates and a possible decrease in electric rates or a PCA credit. With reference to competitiveness, Mr. Koenig stated that the City’s residential electric rates were very competitive; however, there had been criticism of the City’s commercial electric rates. From a business and economic development standpoint, he felt that the City should focus on these rates in an effort to attract businesses or improve business partnerships. Mrs. Mitchell reminded members that the City established the Rate Stabilization Fund and as long as that reserve is maintained, she felt confident that the City would have the ability to manage any temporary or short-term fluctuations.

COUNCIL RETREAT OF MARCH 22, 2013 PAGE 3 Mr. Hare questioned if the City of Dover Electric System Valuation study recently completed by GAI Consultants contained information on the value of Units 1 and 2. Mr. Koenig stated that, due to depreciation, Units 1 and 2 (from 1961) have no value. He explained that the study determined the market value of the electric system if it were to be sold and outlined the associated impact to the community. Mrs. Mitchell reviewed the Personnel Cost Comparison (Exhibit #4). She advised members that $309,000 is the result of Medical Insurances from the 6%+ increase, and $339,800 is the result of OPEB increases, reminding members that there are some issues where there is no control over expenses. By unanimous consent, members took a brief recess. Meeting recessed at 3:48 p.m. and reconvened at 3:59 p.m. PROGRAM REVENUES - POLICE EXTRA-DUTY Mrs. Mitchell provided members with the Tampa Police Department Extra-Duty Conditions and Permit (Exhibit #5), which is a policy for the Tampa, Florida Police Department. In reviewing several policies and procedures for other jurisdictions, she felt that the Tampa Procedure could be modified to meet the City’s needs in this regard. She explained that there were issues with the revenue and expenses reported for Police Extra Duty and provided members an Analysis of Police Extra Duty and Law Enforcement Revenues - Non-Extra Duty (Exhibit #6). As an example, she stated that the City was billed for $593 in October 2006 and $603 in May 2007 for services provided for the Municipal Election. These, as well as other expenses, remain as outstanding receivables, totaling $52,499 as of February 28, 2013. In researching, she discovered that payment was reflected in the City Clerk’s Office Budget for the Police Extra-Duty in October 2006 and May 2007; however, these payments were not reflected in the receivables, which indicated that the revenue was credited somewhere else in the ledger. In addition, Mrs. Mitchell stated that the Police have Drug Enforcement Administration (DEA) overtime through a grant which had been coded as Extra-Duty for the DEA officers’ time. This was not being counted as Extra-Duty revenue since it was in the DEA revenue. By adding the DEA revenue to the Police Extra-Duty, the gap between the revenue and expenses for the Police Extra-Duty would not be as large; therefore, she explained that there were some accounting and billing issues that needed to be resolved. Once staff finalizes a procedure for Police Extra-Duty, she assured members that it would be presented to City Council for approval. Responding to Mr. Bonar, Mrs. Mitchell indicated that she would work with the Chief Hosfelt to determine the possibility of developing a means to automate payments to resolve some of these issues. Mr. Hare questioned if the City bills all costs associated with providing the Police Extra Duty, such as Workman’s Compensation, administration, etc. Responding, Mrs. Mitchell explained that the Police Department bills for police officers’ wages, plus Worker’s Compensation and the Federal Insurance Contributions Act (FICA) rate. However, she noted that since some grants allow for

COUNCIL RETREAT OF MARCH 22, 2013 PAGE 4 charges only up to a certain amount, there are instances where the City does not recover all costs involving grants. Otherwise, she assured members that the City recovers the costs of labor and benefits associated with police officers but not the administration or vehicle costs, which is one of the reasons for developing a policy that would create a rate that would cover all costs, plus the possibility of a mark-up. STAFFING LEVELS AND RECOMMENDATIONS Referring to Exhibit #4, Mr. Koenig noted that staff had estimated $30M being spent on personnel costs. He advised members that the City’s personnel is its biggest asset and, at the same time, the City’s biggest liability in terms of a single financial payment. As a result, he stated that the City’s biggest investment was its personnel. Mr. Koenig reviewed the FY2013 Annual Operating Budget - Personnel Table (Exhibit #7), indicating that there were a total of 350 full-time and 36 part-time employees. He explained that the handwritten numbers were being proposed for FY2014. He advised members that although there had been an increase in Code Enforcement (from four (4) to five (5) employees), staff transferred an employee from the Inspections Department to Code Enforcement, which resulted in a decrease in personnel for the Inspections Department (from seven (7) to six (6) employees). He stated that the net result of personnel proposed is 345 full-time positions. He explained that there had been requests for additional personnel for those departments that were highlighted. Ultimately, he felt that the City should be able to continue to operate effectively with a total 350 full-time positions if the right people were in the right positions and were focused on their jobs. Mr. Koenig reviewed a Presentation of Staffing Levels and Recommendations (Exhibit #8). In regard to the Pension Plan, he advised members that there were 130 active employees in the defined benefit plan and that new employees are no longer eligible for the defined benefit plan, with the exception of new Police Officers due to their participation in the State Plan. He stated that the Police Department’s request for an Accreditation Manager had been ranked as #3 and that it may not be budgeted for the upcoming year. He explained that as a policy issue, transfer of some of the duties of Police Officers to a civilian employee should be considered. As a result, he advised members that rather than increasing the number of officers, there may be an addition of a civilian position, which would result in more police manpower on the City streets. Responding to Mr. Bonar, Mr. Koenig stated that there had been brief discussions regarding the possibility of shared dispatch operations for the Police and Fire Departments. However, he stated that there were issues regarding the security of the Fire Department, explaining that Fire Dispatchers play a role in allowing access to the facility and maintaining it. He stated that, although this was not an insurmountable issue, there were concerns and advised members that the Fire Department also indicated that this could impact their mission and how they secure their buildings. He felt that there were alternatives that could be evaluated in this regard, explaining that there were examples of other jurisdictions that handle these matters differently than the City. To alleviate the need for additional employees for the Customer Service Department, Mr. Koenig stated that there had been discussions regarding the possibility of installing payment kiosks at 5 East Reed Street and the new Library. In response to Mr. Anderson, Mr. Koenig stated that

COUNCIL RETREAT OF MARCH 22, 2013 PAGE 5 although there would be fees involved, the use of debit/credit cards is a reality of doing business. He noted that staff would like to add in debit/credit card transaction fees and had been discussing how this could be accomplished to accommodate debit/credit card use. Mrs. Mitchell advised members that the fees for the use of debit/credit cards are based on volume of users. Mr. Koenig stated that the ultimate desire was for customers not to be involved in these types of fee transactions and for fees be built into the customer charge or rates. In response to Mr. Hare, Mr. Koenig reminded members that the lock box costs $50,000; however, the use of the lock box eliminated a position in the Customer Service Department. Responding to Mr. Hutchison regarding Electric Department Personnel, Mr. Koenig stated that there were several key positions that were vacant, including the Electric Director, Electric Engineering, Superintendent of Line Crew, etc. He stated his desire to fill these positions; however, he was waiting for the completion of the Valuation Study to obtain direction, explaining that these are very difficult positions to recruit and that there should be a determination if the City is going to sell its Electric Utility before such a process is started. Once City Council provides direction regarding the future of the Electric Utility, staff would be prepared to take appropriate action to begin the process of filling these positions. DISCUSSION ABOUT REVENUES Referring to Exhibit #1, Mr. Koenig reiterated that the City’s revenues are driven by the construction market. He stated that the reason the building permit fees were above what was anticipated was solely due to the construction of the new Dover High School. He explained that the residential and commercial growth component is very important to the City’s General Fund Budget. In addition, he stated that residential and commercial growth drives the impact fees for water and sewer, which help to pay off long-term debt in the water and sewer utility or help offset costs associated with the growth projects in the water and/or sewer utilities. With regard to new revenues, Mr. Koenig stated that although there are potential camera projects in school zones related to speed safety, since the legislation has not been adopted, these monies were not included in the proposed budget. He explained his understanding that there is legislation that would create a pilot program for Wilmington and Dover to put speed cameras in one (1) or more school zones within the City limits, similar to the red light program; however, he stated that the legislation had not received enough votes to get out of committee. He noted that the technology was available to institute such a program. Should this program come to fruition, he would anticipate a spike in revenues originally but then a decline once drivers become aware of the cameras. Mr. Koenig reminded members that there had been discussion regarding the possibility of instituting a hotel tax. He suggested the possibility of working with Kent County regarding this matter, feeling that it would serve as a revenue source for them as well. He advised members that the hotel industry had been adamantly opposed to the tax, explaining that it had allowed them a competitive advantage in securing conventions and similar events. He stated that most areas include a local and county hotel tax and felt that this was a matter that should be further discussed.

COUNCIL RETREAT OF MARCH 22, 2013 PAGE 6 Mr. Koenig stated that property taxes raise significant amounts of money for the City of Dover; therefore, unless members had alternative ideas, in order to address the $718,500 budget deficit in the General Fund, staff would be proposing an increase in the tax rate. Referring to the $718,500 budget deficit, Mr. Koenig advised members that it did not include ambulance service, an increase to the $51,000 for the Downtown Dover Partnership, salary increases for the non-bargaining employees, staffing fees, etc. Once these amounts are included, he anticipated a deficit in the amount of $750,000-$1,000,000. It was his opinion that the City would continue to have a difficult time balancing the General Fund budget if the tax rate were not adjusted, expressing the dire need to stabilize the General Fund. Referring to the Electric Fund, Mr. Koenig stated that there were concerns regarding the City’s commercial and some industrial rates and that he anticipated that members of Council would hear from businesses regarding this issue. He advised members that business owners had indicated that if the electric rate were adjusted, businesses would come to the area, which would bring jobs and residential growth to the City. As previously indicated, he stated that the commercial and residential growth would help mend some of the other issues in the General Fund and the City’s Budget in general. PRIORITIES FOR NEXT YEAR Mr. Koenig reviewed a Presentation - Ambulance Service for the Robbins Hose Fire District (Exhibit #9). He stated that the City’s current ambulance provider is Prime Care and that the contract is effective through calendar year 2015. The current contract includes ambulance service within the City limits; however, he stated that the Robbins Hose Fire District extends beyond the City limits. As indicated on Page 2 of the presentation, he noted that during the last 10 years, ambulance calls had increased from 3,860 in 2002 to 6,599 in 2012. Mr. Koenig stated that as the City has grown, members have discussed the impact on the City’s water system, trash collection, annexation, etc.; however, he did not recall any discussion regarding the impact on some of the City’s life safety issues and emergency services. With reference to the other ambulance service providers, Mr. Koenig explained that he had been made aware of operational problems being experienced. He was advised that these ambulance service providers have a paid ambulance staff that has had to address calls in Dover. When the ambulance responds to an emergency in Dover, ambulance drivers are the same individuals who drive fire trucks. Therefore, if the jurisdiction receives a fire call while on an ambulance run, it reduces the amount of people available to drive fire trucks, which results in a domino effect. Mr. Koenig stated that staff was trying to determine if more coverage is needed in the daytime and questioned if there were a way to reposition the impact on adjoining ambulance service providers. Responding to Mr. Hare, Mr. Koenig stated that staff was working on various concepts and associated costs in order to present a recommendation during budget review.

COUNCIL RETREAT OF MARCH 22, 2013 PAGE 7 Referring to the growth chart (Page 2 of presentation), Council President Leary noted that the increase did not represent the City’s population increase and questioned what was driving the increased calls. Responding, Mr. Koenig stated that the 55 and older community has caused the substantial increase. Mr. Bonar advised members that the legislature was reviewing this matter in an attempt to alleviate some of the costs associated with providing ambulance services. CONCERNS OF COUNCIL MEMBERS Council President Leary noted that concerns had been relayed by members of Council regarding certain issues, as follows: Building Security Referring to a recent shooting at the New Castle County Courthouse, Mr. Lynn explained his concerns regarding building security for the City of Dover, particularly City Hall, specifically as it related to Council and Committee Meetings. He noted that most other governmental buildings in the area had armed security personnel as well as metal detectors and he found it somewhat disconcerting that the City had no security protocols in place for City Hall. Referring to access to the back door of City Hall during City Council Meetings, he suggested that minimally, the back door should be secured so that people would not be permitted to enter or exit at that location. He also suggested that there be a uniformed Dover Police Officer at City Hall, in conjunction with a metal detector or wand, checking individuals before they are permitted to enter the Council Chambers. Mr. Bonar stated the possibility of Homeland Security Funds being available in order to provide some type of security features as suggested. Open Forum Policy Council President Leary noted that often is no one wishing to take advantage of the Open Forum provided to the public 15 minutes prior to each Regular Council Meeting. In addition, he stated that there had been individuals who do not reside in the City of Dover addressing members regarding non-productive issues during this time. He questioned if members feel that the Open Forum should be altered, changed, eliminated, or used only when a request is made in advance. Mr. Hutchison felt that City Council should continue to have an Open Forum segment; however, he suggested that it be held at the conclusion of the Council Meeting rather than prior to the Meeting. He felt that the concerns that had been brought to members during the Open Forum could have been addressed at another time or through other means and suggested that holding it at the conclusion of the meeting would still allow for the public to relay their points of view. Although he understood the suggestion, Mr. Hare explained that offering the Open Forum prior to the Council Meeting provides the public 15 minutes to speak and if the Open Forum were held at the conclusion, there would be no time limit and the Open Forum could become quite lengthy.

COUNCIL RETREAT OF MARCH 22, 2013 PAGE 8 Council President Leary reminded members that a television camera would continue to be on if the Open Forum were held at the conclusion of the Council Meeting and that individuals may speak simply to have that type of publicity. Mr. Lynn explained that the airing of grievances is a fundamental constitutional right protected by the First Amendment, which is not just the freedom of speech but contains five (5) other freedoms, including the right to petition. It was his opinion that the Open Forum provides the public the opportunity to petition and air grievances and relayed reluctance to make any changes whatsoever. Council President Leary questioned support for limiting the use of the Open Forum to only City residents. Responding, Mr. Anderson reminded members that there would be instances where an individual may not live in the City limits but may own property, have businesses, work, worship, etc. within the City limits and should be provided an opportunity to address members of City Council. It was his opinion that the Open Forum had proven beneficial and helpful to members of Council and City staff and that no changes should be made at this time. Mr. Lynn suggested that there be a policy change prohibiting the use of delegation of time. Responding, Council President Leary stated that there could be a simple change to the Open Forum statement that is read aloud. Dover Human Relations Commission Mr. Hutchison noted that the Dover Human Relations Commission (DHRC) consists of 15 members who are appointed for three (3) year terms. He stated that 22 of the appointees quit prior to completing their terms and that there were currently of six (6) vacancies. He suggested that members consider eliminating the DHRC and to allow the State of Delaware Human Relations Commission to handle these matters for the City of Dover. He relayed concerns that there had been periods when the DHRC had not received complaints and began “looking” for complaints, which he feels creates a serious liability for the City. Mr. Hare advised members that the State Human Relations Commission meets only when a complaint is received. He suggested that if the DHRC were retained, it should function in the same manner as the State. Concurring, Mr. Anderson felt that the DHRC has a viable function but that the Commission should not be required to meet every month. He suggested that once a quarter would be more reasonable and if there were an intake issue/complaint needing to be addressed, a meeting could be held to review this. He reminded members that members of the DHRC are not compensated although they are required to meet monthly and felt that there would be more cooperation if they were not required to meet as frequently as currently required. Mr. Dixon relayed his support for the DHRC; however, he agreed that the monthly meeting requirement may be excessive and that a meeting once per quarter would be sufficient.

COUNCIL RETREAT OF MARCH 22, 2013 PAGE 9 Mr. Bonar stated that although he agreed with the suggestion to require the DHRC to meet quarterly rather than monthly, he also agreed with Mr. Hutchison regarding the concept of the City utilizing the State Human Relations Commission for any concerns or complaints. He suggested that the Legislative, Finance, and Administration Committee review this matter and also to consider other committees and commissions to determine if improvements could be made to all. Mr. Hutchison stated his concern with there being 15 members on the DHRC and suggested consideration of reducing the membership to five (5) or seven (7). In response to Mr. Bonar, Mr. Lynn agreed to place this matter on an upcoming agenda; however, he requested that staff develop a presentation to include an historical overview to include its origin and initial mandates, etc. Council President Leary thanked City staff for their assistance in conducting the Council Retreat. By unanimous consent, the meeting adjourned at 5:45 p.m. Thomas J. Leary Council President TJL/TM/jg S:\AGENDAS-MINUTES-PACKETS\Council-Minutes\2013\03-22-2013 Retreat.wpd Exhibits Exhibit #1 - Revenue Reports through February 28, 2013 Exhibit #2 - 2013-2014 Fund Summaries Exhibit #3 - Electric Power Supply and Generation Trends for FY12 Budget and FY13 and FY14 Forecasts Exhibit #4 - Personnel Cost Comparison Exhibit #5 - Tampa Police Department Extra-Duty Conditions and Permit Exhibit #6 - Analysis of Police Extra Duty and Law Enforcement Revenues - Non-Extra Duty Exhibit #7 - FY2013 Annual Operating Budget - Personnel Table Exhibit #8 - Presentation of Staffing Levels and Recommendations Exhibit #9 - Presentation - Ambulance Service for the Robbins Hose Fire District

EXHIBIT #1 Council Retreat of 03/22/2013 EXHIBIT #1 Council Retreat of 03/22/2013

EXHIBIT #2 Council Retreat of 03/22/2013

EXHIBIT #3 Council Retreat of 03/22/2013

EXHIBIT #4 Council Retreat of 03/22/2013 EXHIBIT #4 Council Retreat of 03/22/2013

EXHIBIT #5 Council Retreat of 03/22/2013

EXHIBIT #6 Council Retreat of 03/22/2013 EXHIBIT #6 Council Retreat of 03/22/2013

EXHIBIT #7 Council Retreat of 03/22/2013

EXHIBIT #8 Council Retreat of 03/22/2013 EXHIBIT #8 Council Retreat of 03/22/2013

EXHIBIT #9 Council Retreat of 03/22/2013 EXHIBIT #9 Council Retreat of 03/22/2013