Attachment

LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE AGENDA FEBRUARY 13, 2012 - 5:30 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. Review and Recommendation - Filling Critical Positions A. Fire Dispatcher B. Electric Department b-1. Electrical Engineer b-2. Substation Technician (2) 2. United Networks of America Revised Letter of Agreement (Committee Tabled on December 12, 2011 Until Such Time That Some Type of Accounting Assurance is Provided to the City) 3. Staff Recommendations (Tabled by Committee on January 9, 2012) A. Economic Development Office B. Community Development Office 4. Proposed Ordinance #2012-03 - Related to Senior Citizen Income Exclusions (Referred Back to Staff on January 23, 2012) 5. Request of City Manager - Employment Related Benefits/Expenses 6. Adjournment by 7:00 P.M. /tm S:\AGENDAS & MINUTES\Committee-Agendas\2012\02-13-2012 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.

Memorandum Office of the City Manager PO Box 475 Dover, DE 19903 Phone: (302) 736-7005 FAX: (302) 736-7002 E-mail: skoenig@dover.de.us To: Legislative, Finance & Administration Committee From: Scott D. Koenig, P.E. City Manager Date: February 13, 2012 Subject: Filling of Critical Positions – Electric Department The attached documentation outlines the Electric Department’s request to fill three (3) vacant or soon to be vacant positions within the Department. At this time, there are a total of six (6) vacant positions within this department. An additional vacancy is expected on or about April 1, 2012, due to an expected retirement. The Interim Electric Director, Mr. Jeremy Johnson, has analyzed the needs of the utility and requested to fill the positions outlined in this documentation. Due to the considerable amount of vacancies in the current fiscal year, funds are available to hire the requested positions. In addition, the FY-2013 budget should be able to handle this level of staffing as I anticipate not filling several of the vacant positions. The Departmental Budget and Support Supervisor position will be removed from the FY-2013 budget altogether. These positions were also identified by the former Public Utilities Director, Mr. Ron Lunt, as being critical to the function of the city’s electric utility. Based upon the reviews by both Mr. Johnson and Mr. Lunt, I have concluded these positions are critical and must be filled. Please note this request will upgrade the open position of Substation Relay Foreman to an Electrical Engineering position. The estimated budget impact of this upgrade is $18,409; however, this change will significantly expand our engineering capability. I believe the requested recruitment is in the best interest of the City.

Memorandum Electric Department 860 Buttner Place Dover, DE 19904 Phone: (302) 736-7088 Fax: (302) 736-7081 E-mail: jjohnson@dover.de.us To: Scott Koenig City Manager From: Jeremy Johnson Interim Electric Director Date: January 18, 2012 Subject: Critical Positions Recommendation The Electric Department currently has the following 6 budgeted positions vacant: Public Utilities Director Departmental Budget and Support Supervisor Substation Relay Foreman Journeyman Line Worker Substation Technician II Journeyman Line Worker Understanding the difficult economic times and the importance to operate as efficiently as possible, only the Substation Department’s vacant positions are being deemed critical. The responsibilities of this department include providing safety to city employees and the general public, and include a vital role in restoring power during outages. Additional functions of this department are substation maintenance, completion of capital projects, and supporting the Electric Department’s daily operation. The minimum staffing level of the Substation Department is five and is currently operating at three, with a Substation Technician expecting to retire in April 2012. I recommend that the Substation Relay Foreman vacancy be filled by an Electrical Engineer. This will increase efficiency because the Substation Relay Foreman’s responsibilities will be satisfied and some engineering duties can be absorbed. Additionally, I recommend hiring two Substation Technicians at the entry level grade. This will replace the vacant Substation Technician II and prepare the department for the retirement of the other Substation Technician.

Hiring Justification Outline Date: January 9, 2012 Title of Position: Electrical Engineer Department: Electric ________ 1. Explain the principal function of this job. The principle function of the position within the organization is to supervise and perform electrical engineering and technical work. The position is responsible for supervising assigned personnel; planning and designing electrical projects; investigating and developing corrective action to electrical disturbances; developing, monitoring and ensuring compliance with Reliability First/NERC reliability requirements; and periodically reporting activities and events to supervisors. The position works independently, reporting major activities through periodic meetings. 2. Explain why this position is critical and cannot go unfilled or postponed? Overseeing the substations, technicians, and work as noted above is critical to ensure that the City of Dover continues to provide safe, reliable electric to its customers, while meeting the applicable standards and regulations. The Electrical Engineer is a position that requires a high level of substation, communications and system protection knowledge. Currently, the Interim Electric Director (who was the Electrical Engineer) is handling the duties of this position, providing technical expertise and keeping projects and maintenance moving. This is a result of the Public Utilities Director and Substation Relay Foreman both leaving the city. This is not a sustainable arrangement due to the sheer volume of work involved. It will result in delays in proper substation maintenance and project planning and completion. Additional results include compromising safety, possible future NERC reliability standard compliance penalties, and a reduction in electric reliability. Existing staff does not have the required qualifications to fill the position. Additionally, the Director will not be able to function efficiently or to capacity. 3. How would city services diminish if this position were not filled or postponed at this time? The Electric Department’s ability to properly oversee the day-to-day operations, substation maintenance and restoration of electric during outages is decreased, if the position remains vacant. The department is starting to see the effects of this vacancy as future project delays are being discussed. The Substation CT and PT replacement project, Frazier Substation Reliability Upgrade, and Horsepond Substation Reliability Upgrade are among the capital improvement projects impacted. 4. Are there other employees whose ability to perform would be diminished by not filling or postponing this position? Yes. Work is currently being managed by the Interim Electric Director, whose priorities are being adjusted according to significance, on a daily basis. This forces delays in Director’s responsibilities and limits the department from functioning efficiently, at its full capacity. Additionally, the Interim Electric Director still has responsibilities from his former Electrical Engineer position of which cannot be delegated. 5. Is there a person that can be promoted into this position and whose position is less critical at this time and can go unfilled permanently or temporarily?

No. The city doesn’t currently employ anyone with the necessary qualifications. Including the Substation Relay Foreman position, the substation department is down two employees. Therefore, the department is below minimum staffing levels. Additionally, the department is expecting a substation technician to retire in the spring. 6. Can one or more existing employees absorb the duties of this position? No. Including the Public Utilities Director, the Electric Department has lost 4 of its 7 managers over the past 2 years. Current management positions have already been asked absorb the duties of positions that the department decided in the past not to refill, such as the Meter Crew Leader and the Departmental Budget and Support Supervisor. The Electric Department has leaned out over the past few years and urges that this position be filled. 7. Salary Information Annual at $58,000 - $75,000 Benefits 37.1% thus, $79,518 - $102,825

Hiring Justification Outline Date: January 9, 2012 Title of Positions: Substation Technicians (2) Department: Electric ________ 1. Explain the principal function of these job. The principle function of these positions within the organization is to maintain and upgrade substations, including all substation equipment, communication systems, and protection systems. These positions work with substation environmental concerns, conduct substation component testing, related documentation, and work under general supervision independently developing work methods and sequences. 2. Explain why these positions are critical and cannot go unfilled or postponed? Under normal departmental staffing levels, there are four substation technicians. Earlier in the year, one of the substation technicians retired. The hiring freeze has delayed the filling of this position. Another substation technician is retiring in the spring. This causes a tremendous problem with the productivity of the department and the on-call schedule. Substation Technicians are among those asked to respond, outside of regular work hours to assist in restoring electric, during outages. When staffed at the normal level of four, each substation technician is scheduled to be on-call one week per month. If the staffing level falls to two technicians, the on-call schedule will be forced to two weeks per month. 3. How would city services diminish if these positions were not filled or postponed at this time? The Electric Department’s ability to properly maintain substations will be reduced. This results in a reduction in the life of the equipment and/or equipment failure, which causes electric outages and expensive replacements. Additionally, completion of current scheduled capital projects such as the Substation CT and PT replacement project, Frazier Substation Reliability Upgrade, and Horsepond Substation Reliability Upgrade will be delayed. Employee and public safety is also diminished as the protection systems that the substation department is responsible for, removes power and prevents reenergizing when problems occur. 4. Are there other employees whose ability to perform would be diminished by not filling or postponing these positions? Yes. The whole substation department’s performance would be diminished. If not filled, there will only be one crew of two technicians. Linecrew’s ability to perform would also be diminished, because their work often requires circuits to be switched from substation to substation. The Linecrew and substation technicians work together to complete this switching. Often all four substation technicians would be utilized for this switching and currently while staffed at three, technicians are forced to travel to back and forth to substations causing delays. These delays will be increased should there only be two substation technicians. During emergency power restoration, this inability to efficiently complete switching will result in longer power outage durations. 5. Is there a person that can be promoted into these positions and whose position is less critical at this time and can go unfilled permanently or temporarily?

No. Because the electric department has significantly advanced its system protection by installing microprocessor relays, the qualification of the Substation Technician has been increased and the city doesn’t currently employ anyone with the necessary qualifications. 6. Can one or more existing employees absorb the duties of these positions? No. With the installation of the microprocessor relays, existing employees don’t have required skills for the advanced system protection schemes. Following the retiring substation technician, the department will be half staffed at two. 7. Salary Information Annual at $46,054 Benefits 37.1% thus, $63,140

A B C D E F G H I J K L M N 1 EXHIBIT #5 2 LF&A Action Form 02-13-2012-Agenda Item #1 3 City of Dover 4 Wage and Benefit Information for Employee Hiring and Transfers 5 6 Department/Division Originating Request Electric - Engineering 7 Date January 12 2012 (Form has been developed to handle multiple departments/multiple funds to cover allocated departments and funding sources) 8 # Mos. To Date Lump Sum Current Separation Wages Benefits Annual Wages & % Year Benefits To Date Benefits Wages & Paid To Date Current Fiscal 9 Current Positions Grade/Step Date * Budgeted Budgeted Benefits Wages Paid Paid Wages Paid Paid Benefits Paid (I, J, K) Year Balance Remarks 10 Position(s) Substation Relay 119 11/11/11 62,408.00 21,894.00 84,302.00 36.3% 4 26,958.00 7,871.00 1,339.00 36,168.00 48,134.00 FY 12 Vacancy 11 Foreman Substation Technician 19/D 8/31/11 53,310.00 18,656.00 71,966.00 16.7% 2 15,162.00 3,738.00 1,606.00 20,506.00 51,460.00 FY 12 Vacancy 12 2 13 Totals Annual Cost $156,268.00 $56,674.00 $99,594.00 14 # Mos. Estimated Replacement/ Proposed Projected Estimated Estimated Estimated Total % Year Wages Benefits Amount 15 Transfer Position Grade/Step Hire Date Wages Benefits Compensation Needed Needed Wages Benefits Needed Remarks 16 Position(s) Electrical Engineer 1 124-126 4/1/12 74,917.00 27,794.00 102,711.00 24.6% 1 18,422.21 2,316.17 20,738.38 In lieu of replacing the or 2 (market range 1 Substation Relay 17 vs 2) Foreman Substation Technician 18/A 4/1/12 46,054.00 17,086.00 63,140.00 24.6% 3 11,324.75 4,271.50 15,596.25 To fill vacant position 18 1 Substation Technician 18/A 4/1/12 46,054.00 17,086.00 63,140.00 24.6% 3 11,324.75 4,271.50 15,596.25 To approve filling 1* potential vacant position 19 20 Totals Annual Cost * 165,851.00 Does not include second Substation Technician 1 in annual total 36,334.63 *Includes all 3 above 21 22 Balance ($9,583.00) $63,259.37 23 Increase/ Description of funding 24 Department Summary (Decrease) Funding Source: source General Ledger Account 25 Electric - Engineering ($63,259.37) General Fund $0.00 N/A N/A 26 0.00 Water/Wastewater Fund 0.00 N/A N/A 27 0.00 Electric Fund (63,259.37) Net FY12 Savings 8300-563 28 Total ($63,259.37) Grant Fund 0.00 N/A N/A 29 Total ($63,259.37) 30 31 Department/Division Department/Division Department/Division 32 Fund Budget - Increase/(Decrease) Electric/Engineering Increase/ Increase/ Allocation Increase/ Increase/ 33 Fund (Decrease) Allocation % (Decrease) % (Decrease) Allocation % (Decrease) 34 General Fund $0.00 0.0% $0.00 10.3% - 0.0% - Allocated Department 35 Water/Wastewater Fund 0.00 0.0% $0.00 8.3% - 0.0% - percentages can be found 36 Electric Fund (63,259.37) 100.0% ($63,259.37) 100.0% - 100.0% - in Budget Document, 37 Grant Fund 0.00 0.0% $0.00 0.0% - 0.0% - obtained from Finance or

A B C D E F G H I J K L M N 3 City of Dover 4 Wage and Benefit Information for Employee Hiring and Transfers 38 Total ($63,259.37) Total ($63,259.37) Total $0.00 Total $0.00 the City Manager's Office 39 This form is to be completed when requesting to fill vacant positions or to transfer staff between divisions or operating funds. The purpose of which is to determine how changes in personnel will affect the 40 41 budget for each operating fund. If the changes increase operating expenses then the funding source to cover the increase is to be included. 42 43 Directions for Completing Wage and Benefit Information for Employee Hiring and Transfers 44 45 Column Description Instructions A Position Title Current Position Section - Title of position vacated; Replacement/Transfer Position Section - Title of replacement position, or title change if applicable 46 of employee transferred. 47 B Current Grade/Step Current Position Section - Current grade and step (if applicable) of current position; Replacement/Transfer Position Section - Proposed grade and 48 step; 49 C Separation Date Current Position - Last day paid. If employee elects to take terminal leave, then separation date must be date terminal leave ends. 50 Replacement/Transfer Position Section - Proposed hire date of this position. 51 D Wages Budgeted Current Position Section - Annual wages budgeted for the current employee in this position. If unknown, contact City Manager's Office or Finance 52 Office; Replacement/Transfer Position - Proposed hourly rate times 2080 hours. FY12 has 366 days so use 2088 hours. 53 E Benefits Budgeted Current Position Section - Annual wages budgeted for the current employee in this position. If unknown, contact City Manager's Office or Finance Office. Replacement/Transfer Position Section - Calculate by multiplying wages time benefit rates. If this is a new position use the highest benefit rate to insure budgetary funding. See below for benefit rates. If this is an existing employee then use actual benefits; 54 55 56 F Annual Wages & Benefits Current Position Section - Column D plus Column E; Replacement/Transfer Position Section - Column D plus Column E; 57 G % Year Wages Paid Current Position Section - Number of days paid for in current fiscal year; Formula set up to automatically calculate based on 366 calendar days in FY12; Replacement/Transfer Position Section - Number of days from estimated date of hire through the end of the fiscal year. 58 59 H # Mos. Benefits Paid Current Position Section - Number of months benefits have been paid out for the current fiscal year; Replacement/Transfer Position Section - 60 Number of months estimated benefits to be budgeted for in the current fiscal year; 61 I To Date Wages Paid Both Sections - Column D times Column G; If actual amounts are available for current employees use actual amounts rather than calculation; 62 63 J To Date Benefits Paid Both Sections - Column E divided by 12 (months) times Column H; Column H is number of months paid to date for current employees and number of 64 months from projected date of hire through June 30 for replacement employees. 65 K Lump Sum Wages & Benefits Paid If paid, contact Finance for amount; If not paid estimate - Hourly rate X hours to be paid plus benefits; Benefit rate = Sum of percentages for FICA, Worker's Comp and Pension times wages to be paid out; (I.e. $18.00 hourly rate x 760 hours = $13,680 Wages x 13.65% (employee with 401a plan) $1,867; $13,680 plus $1,867 = $15,547 estimated lump sum wages and benefits); FY12 - no Worker's Compensation 66 67 68 L Paid to Date Current Position Section - Sum of Columns I, J, & K as calculated above 69 M Current Fiscal Year Balance Current Position Section - Current estimated balance of funds in departmental budget for this position to apply towards new hire or transfer; 70 Replacement/Transfer Position - Amount needed to fund replacement or transferred position. Sum of Column I & Column J. 71 72 N Remarks Any comments you would like to add 74 75 Bottom Section Department & Fund Summaries Formula based calculations of financial impact on individual departments and funds. Describes funding sources for budget increases.

2011 LETTER OF AGREEMENT UNITED NETWORKS OF AMERICA UNA Rx CARD DIVISION UNA Health Discount Card Program Agreement THIS LETTER OF AGREEMENT, to be effective ____________________, is between UNITED NETWORKS OF AMERICA, INC. with corporate headquarters at 3636 Sherwood Forest, Sherwood Tower 440, Baton Rouge, LA 70816 (hereinafter referred to as “United Networks of America” and City Of Dover with headquarters at 15 Loockerman Plaza, Dover, De, 19901 (hereinafter referred to as “SPONSOR”). WITNESSETH WHEREAS, SPONSOR wishes to provide a free discount prescription drug card to members and is willing to let United Networks of America be the exclusive provider for these benefits, WHEREAS, United Networks of America has developed a discount prescription drug program and will provide SPONSOR with access to this program, United Networks of America agrees to provide SPONSOR with a free discount drug card program at no cost. SPONSOR is responsible for any expenses related to promoting the program. However, SPONSOR is not obligated to promote the program. SPONSOR must abide by all state laws and be properly licensed in each state they conduct business in; failure to do so may result in immediate cancellation of agreement. This exclusive agreement shall remain in full force and effect, unless otherwise terminated, for a term of two (2) years. The term of this agreement shall be automatically renewed for successive additional two (2) year terms unless written notice to the contrary is given by either party to the other not less than sixty (60) days prior to the end of the then current two (2) year term. Ninety (90) days prior to the end of the contract United Networks of America will send a letter to the City Manager of the City of Dover with notice that the cancellation time frame is approaching. Either party may terminate this agreement, without cause, by providing a thirty (30) day written notice. SPONSOR will not utilize any other vendor for these services throughout the term of this agreement and during the two (2) month run-out period after termination of this contract. United Networks of America has developed “LOWEST PRICE” logic to guarantee that members get the best available price on UNA Rx Card prescriptions (members pay the lower of a discount off Average Wholesale Price-AWP, discount off MAC Pricing, or Pharmacy Promotional/Retail price). 1 Seal of United Networks of America

Rebate/Transaction Fees: United Networks of America shall pay to SPONSOR a portion of the Rebate/Transaction fees collected on prescriptions processed through the UNA RX CARD program. In accordance with the schedule outlined below. The Rebate/Transaction fee only applies to prescriptions that are adjudicated at the negotiated rates. Prescriptions that adjudicate at the Retail-U&C (Usual and Customary) price DO NOT qualify for Rebate/Transaction payments. United Networks of America is under no obligation to pay Rebate/Transaction fees to SPONSOR if for any reason these funds are not made available to United Networks of America by pharmacy/drug companies. Transaction fees will be paid within 60 days of the end of each calendar month, and documentation allowing the SPONSOR to verify the accuracy of the paid transaction fees will accompany the payment. SPONSOR understands that the payment will only be made on scripts that are processed at a discount and only if transaction fees/rebates are paid by pharmacy/drug companies and received by United Networks of America. Prescriptions processed at U&C do not qualify for reimbursement. I suggest that documentation allowing the City to verify the accuracy should accompany the payment. City should be referred to as SPONSOR. Transactions Fees Payable to SPONSOR $ 0.50 PER PAID SCRIPT Included Program Features On the Fly Enrollment Included Provider Network Management Included Material Review Included Pharmacy / Member Help Desk Included Member Services (Toll-Free) Included Value Added Benefits Programs (subject to change) Vision Program Included Nutritional Supplement Program Included Help Lines Included Pro-Smile Teeth Whitening Program Included Member Co-Payments – United Networks of America Network Pharmacies If a brand name drug is dispensed: 100% of calculated co-pay amount If a generic drug is dispensed: 100% of calculated co-pay amount 2 Seal of United Networks of America

SPONSOR REQUIREMENTS: SPONSOR must have all program materials pre-approved by United Networks of America prior to printing/ distributing. No one is allowed to contact or visit pharmacies without prior written approval from United Networks of America. Failure to meet either of these requirements will result in immediate termination of agreement. In Witness Whereof, the parties here have to execute this agreement as of the date first above written. SPONSOR United Networks of America, Inc. ____________________________ _ ______________________________ Name Francesco Ciccone Title EVP Date: _______________________ Date: _________________________ 3 Seal of United Networks of America

MEMORANDUM Department of Planning and Community Development P.O. Box 475 Dover, Delaware 19903 Phone: 302.736.7196 Fax: 302.736.4217 Date: January 4, 2012 To: Legislative, Finance and Administration Committee From: Ann Marie Townshend, AICP RE: Community Development Program – Proposed Reorganization of Program Staffing The City’s Community Development Program administers funds from the Community Development Block Grant (CDBG) Program which are distributed to the City by the U. S. Department of Housing and Urban Development (HUD). In recent years, the City’s funding allocation has been cut. The federal grant guidelines allow for up to 20 percent of the allocation to be used for program administration. As the City’s allocation shrinks, the amount of money available to support program administration is proportionally reduced. The presence of the Neighborhood Stabilization Program, and administrative dollars utilized from this funding, has helped to reduce the General Fund’s subsidy to the CDBG administration. With anticipated funding for the upcoming program year, it is expected that the City will be able to spend less than $50,000 of the grant allocation on program administration. The Fiscal Year 2012 budget for program administration is approximately $75,000 ($72,493 comprising personnel costs). In looking at how we can reduce program cost and gain efficiency in expenditure of program administration funds, I have looked at streamlining the subgrant process. This proposal is being submitted to the Parks, Recreation & Community Enhancement Committee for review on January 9, 2012. With gaining efficiency due to streamlining of program administration, I am recommending that City Council authorize me to restructure the Community Development Program and what is currently the Community Development Manager position to allow for this position to take on additional responsibilities outside the Community Development Program. As you may know, one of the planners left the Planning Office in September 2011, after the Planning Office had taken on administration of the City’s Municipal Separate Storm Sewer System (MS4) permit. This has added an increased burden to the existing planning staff. By moving the Community Development Program under the Planning Office and retitling the Community Development Manager position to a Planner I, I will have more flexibility in assigning the workload among the members of the Planning Staff. If Council concurs with this reorganization, I will work with the Principal Planner to distribute workload associated with the CDBG program, permit review, and MS4 administration in a way that provides quality customer service, acceptable turn-around time on permit review, and staffing to ensure that we meet our obligations under the MS4 permit. The Community Development Manager is a pay grade 120, and the Planner I is a pay grade 117. No pay adjustments is recommended, as the employee’s current salary is within the range for a Planner I.

ACTION FORM PROCEEDING: Legislative, Finance, and Administration Committee AGENDA ITEM NO.: DEPARTMENT OF ORIGIN: Assessor’s Office DATE SUBMITTED: 2/13/2012 PREPARED BY: Cheryl Russell, Assessor SUBJECT: Proposed Amendment to Chapter 102 – Taxation, Section 102-183 – Qualifications, Exclusion from Income, of the Dover Code REFERENCE: Senior Citizen Property Tax Abatement Discussion 11/14/2011 Ordinance #2012-03 RELATED PROJECT: APPROVALS: Council EXHIBITS: 1. Draft Ordinance 2. Background and Analysis from 1/23/2012 CAF 3. Background and Analysis from 11/14/2011 CAF 4. Michael Smith Email EXPENDITURE REQUIRED: N/A AMOUNT BUDGETED: N/A FUNDING SOURCE (Dept./Page in CIP & Budget): N/A TIMETABLE: Upon Council Approval RECOMMENDED ACTION: Staff recommends amending ordinance 102-183 (b)(3) to update the language to specify Civil Service Retirement System (CSRS) as the type of Civil Service Retirement to be excluded and also to strike out the dollar amount for the maximum amount allowed for the deduction from income. Background and Analysis Staff was requested at the January 23, 2012 Legislative and Finance Committee Meeting to look into amending the language of the ordinance title to specify that the senior citizen abatement was for low-income senior citizens. This was reviewed by our City Solicitor, who recommended not changing the title of this ordinance. The authority for this exemption comes from 22 Del C §1001 “Exemptions from Municipal Taxation on Real Property For Persons 65 Years of Age or Older.” Per our Background And Analysis from 11/14/2011 and 1/23/2012 and discussions, staff recommends amending ordinance 102-183 (b)(3) to update the language to specify Civil Service Retirement System (CSRS) as the type of Civil Service Retirement to be excluded and also to strike out the dollar amount for the maximum amount allowed for the deduction from income.

CITY OF DOVER PROPOSED ORDINANCE #2012-03 1 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN COUNCIL 2 MET: 3 That Chapter 102 - Taxation, Article VI - Exemptions; Board of Assessment Appeals, Section 102-183 - Tax 4 Exemption for Senior Citizens, be amended by inserting the text indicated in bold, blue, italics and deleting 5 the text indicated in red strikeout as follows: 6 Sec. 102-183. - Tax exemption for senior citizens. 7 (a) Authority. This section is adopted to implement 22 Del. C. § 1001 et seq., granting exemptions from 8 municipal taxation on real property for persons 65 years of age or over. Compliance must be made 9 with such chapter 10 and this section in order to qualify for such exemption. 10 (b) Qualifications. The exemption shall be for real property owners 60 years of age or over. If qualified, 11 their real property shall be exempt from municipal taxation to the extent of the first $50,000.00 of 12 assessed valuation. This exemption shall be subject to the following: 13 (1) Owner resides alone. If the income of a property owner who resides alone exceeds the sum of 14 $15,851.00 (2008) for the income tax year immediately preceding the date of making an 15 application for the exemption, then the exemption shall not be granted. The maximum income 16 limit stated in the preceding sentence shall increase each year by the same percentage as the cost 17 of living adjustment granted to recipients of Social Security retirement benefits. 18 (2) Spouses reside together. If the income of a property owner and spouse who reside together 19 exceeds the sum of $22,192.00 (2008) for the income tax year immediately preceding the date 20 of making an application for the exemption, then the exemption shall not be granted. The 21 maximum income limit stated in the preceding sentence shall increase each year by the same 22 percentage as the cost of living adjustment granted to recipients of Social Security retirement 23 benefits. 24 (3) Exclusion from income. In computing income of the property owner in order to determine 25 entitlement for the deduction, Civil Service Retirement System (CSRS) benefits up to 150 26 percent of the Social Security maximum benefit, Social Security benefits; and railroad pensions 27 and federal civil service retirement (not to exceed the sum of $35,190.00 (2010)—150 28 percent of the Social Security maximum benefit. The civil service retirement income 29 exclusion shall be based each year on the maximum Social Security benefit at 150 percent), 30 shall not be considered as income. 31 (4) Location, use of property. The real property must be located within the limits of the city and 32 must be used exclusively for residential purposes. 33 (5) Residence. The real property must be the legal residence of, and be occupied in whole or in part 34 by, the property owner.

Proposed Ordinance #2012-03 - Chpt 102-Taxation, Art. 6-Exemptions Page 2 35 (6) Owner of record. The property owner must be the owner of record of said real property as of 36 December 31 of the calendar year immediately preceding the date of making application for the 37 exemption. 38 (7) Time when age attained. The property owner must have attained the age of 60 years by March 39 1 of the year in which the exemption application is filed. 40 (8) Filing applications. Applications for exemption shall be filed in accordance with regulations 41 adopted by the city council and for cause shown. The city assessor may accept and act upon 42 applications received after any established application filing date. 43 (9) Refund. The city assessor is empowered to refund taxes paid by a qualified applicant who is 44 entitled to an exemption and successfully files for the same. 45 (10) Evidence. The city assessor's office shall be authorized to require any applicant to submit 46 evidence substantiating income reported for receipt of the exemption. The city assessor may deny 47 applications where requested income verification is not submitted by the applicant. 48 (11) Denial; appeals. Appeals from d Denial of exemptions by the city assessor and any other 49 complaints regarding the exemption process may be appealed by the taxpayer directly to the 50 board of assessment appeals . The board of assessment appeals shall have the power to affirm, 51 overrule or remand the decision of the city assessor. 52 (12) Interest; retroactive exemptions. Qualified senior citizens who fail to exercise their property tax 53 exemption shall not be entitled to any interest payments on said exemption amount; nor shall 54 unexercised property tax exemptions be retroactive beyond the current tax year. 55 (13) Penalties. Penalties assessed to delinquent property tax accounts that are eligible for a senior 56 citizen exemption that has not been exercised shall not be excused. 57 (14) Council review. City council will review these numbers at the conclusion of each reassessment. 58 ADOPTED: * 59 S:\ORDINANCES\2012\Draft\2012-03 - Chpt 102 - Taxation, Art. VI-Senior Citizen Exemption - REVISED.wpd 60 SYNOPSIS 61 This amendment replaces the language “federal civil service retirement” with “Civil 62 Service Retirement System (CSRS)” and changes the computation of the property 63 owner’s entitlement for the deduction from a dollar amount to a percentage of the 64 Social Security maximum benefit. 65 Actions History 66 January 23, 2012 - Referred Back to Staff by the Legislative, Finance, and Administration Committee

BACKGROUND AND ANALYSIS (1/23/2012 CAF) The senior Citizen Tax Abatement qualifications section (b) Exclusions to Income; currently consists of: 1. Social Security benefits 2. Railroad Pensions 3. Federal Civil Service Retirement (150% of current Social Security Limit) The Federal Civil Service Retirement was added a few years ago because it was similar to Social Security (as is the Railroad Pension). Those retirees that are under the “old” CSRS plan did not contribute to Social Security and do not receive this benefit from that employment; therefore this was added to the exclusion of income for the City of Dover Senior Citizen Tax Reduction Program. It has come to our attention that the “new” FERS plan for Civil Service Retirement did contribute to Social Security and receives both social security and pension from this employment; therefore this particular plan should not be added to the exclusion for the City of Dover Senior Citizen Tax Reduction Program. The intent to add Civil Service Retirement weighed heavily on the fact that the retirees do not receive a social security benefit. The amendment to the ordinance specifies that the third exclusion to income be CSRS ONLY. Military Pension Staff does not recommend that Military Pension be added to Section (b) Exclusions to Income, because this retirement plan also contributed to Social Security. This would allow Military Retirees the ability to exclude social security and military pension from their adjusted gross income. (similar to the FERS plan) The revenue impact of adding Military Pension to the Exclusion to Income qualification could not be determined. The census bureau does not differentiate military pensions and was not able to assist us. Income Cap The idea of putting a basic cap on the income limit with no exclusions was reviewed. The only “pro” to this is that there would be no determination needed for exclusions of different plans. The “cons” that we could anticipate are: 1. Complicating the application process; requiring more documentation for seniors with Social Security income only. (195 applicants) 2. Discontinuation of abatement for seniors turning 65when they begin to draw Social Security benefits 3. Not consistent with the County income qualifications Military Disability/Disability Income Staff reviewed the possibility of adding income directly related to disability to the exclusion to income qualification. Kent County offers this deduction from the Adjusted Gross Income. However, Kent County has an income limit qualification on their Disability Reduction; similar to their senior citizen reduction. Kent County also requires that once the property owner is 65 years of age, they are required to apply for Senior Citizen reduction and no longer qualify for the disability reduction. Kent County did not explain the reasoning behind the deduction of the income related to disability; we can only assume it has something to do with the transfer of reduction from Disability to senior citizen at the age of 65. The revenue impact of adding Income Related to Disability could not be determined. Since Kent County transfers the property owner to the Senior Citizen Reduction Program, they do not have the number of property owners that qualify or are considered disabled within the City of Dover limits. Currently, the City of Dover does not have age limitation or income limitations for the disability reduction. The only requirement is that they are 100% disabled as determined by the Social Security Administration and must provide an award letter from SSA each year upon application. New Castle County and Sussex County have income limitations for the disability reduction plan; however they do not deduct income related to disability. They also transfer the property owner to senior citizen when they turn 65 years of age. Staff does not recommend deducting income directly related to disability at this time.

BACKGROUND AND ANALYSIS 11/14/2011 Mr. Smith visited our office and requested that we include military pension as an exclusion to income. We requested that he send a letter to be forwarded to the City Council. There was an Ad Hoc Committee formed in October 2007 to discuss any amendments to this program. The changes made consisted of: adding Federal Civil Service Retirement and increasing the income levels yearly based on COLA. A cap on the Federal Civil Service Retirement was added at a later date. The addition of the Federal Civil Service was based on the fact that this retirement plan was similar to Social Security. The retirees that benefit from this program did not pay into Social Security and do not receive this benefit from that employment. The three exclusions from the income limits are all based on Social Security and “like” programs. The idea of adding the Military Pension as an exclusion to income was brought up at the meetings. There was a short discussion and no action was taken. Military Pension was not considered similar to the Social Security or Social Security “like” programs that were excluded from the Income Limits. Also mentioned was the fact that military personnel also received Social Security Benefits. Mr. Smith states that the Federal Civil Service method is out of date and changed 24 years ago. To date we have approximately 40 senior citizens who are on our mailing list that receive an application each year to return to this office who are receiving Federal Civil Service Retirement. Of these 40 Senior Citizens, 28 receive the tax exemption. This exclusion was added to this program because of the similarity to Social Security. From what we understand now, the CSRS (Civil Service Retirement System) is the “old” retirement plan and there are no contributions to Social Security. The “new” retirement plan is FERS (Federal Employee Retirement System), which is a retirement plan and Social Security is contributed. Mr. Smith does have a valid point, that there is another Federal Civil Service Retirement Plan, which would not fall into the Intent of the Income Exclusion. This is not identified in our ordinance. The Assessor’s Office requests that this item be placed on a future Legislative and Finance Committee Meeting for an amendment, to define that the Federal Civil Service Retirement exclusion be CSRS (Civil Service Retirement System). We have verified that the senior citizens enjoying this benefit that have the Federal Civil Service Retirement did in fact have CSRS.

Hart, Annette From: MICHAEL SMITH <thoy1@msn.com> Sent: Monday, October 17, 2011 5:50 PM To: Hart, Annette Subject: senior tax reduction my name is michael l smith, i live at 208 saxondale ln in dover. i'm writng you about my visit to your office and you informed me that my wife and i are NOT entitled to the tax reduction because being retired military is not a federal retirement. you said the city of dover tax assessers office ONLY considers federal retiree's who draw an annuity from the federal gov. i gave you a couple of letters showing you that the method you are using is out of date, and in fact changed 24 years ago. with this in mind i'm asking the tax office to RECONSIDER allowing military retirement to be EXEMPT as salary as federal workers salary is. the current federal worker PAYS SOCIAL SECURITY just as the military does. thank you for giving our request consideration. michael l smith 1