Minutes

COUNCIL FINANCIAL RETREAT The Council Financial Retreat was held on November 9, 2011 at 5:07 p.m. with Council President Leary presiding. Council members present were Mrs. Russell, Dr. McGlumphy, Mr. Lynn, Mr. Bonar, Mrs. Williams, Mr. Hare, and Mr. Hutchison. Mr. Anderson was absent. Council staff members present were Police Chief Hosfelt, Ms. Russell, Mrs. Mitchell, Mrs. Townshend, Mr. Koenig, and Mrs. McDowell. Mrs. Kay Dietz-Sass, Public Affairs Coordinator, was also present and served as facilitator. AGENDA ADDITIONS/DELETIONS Mr. Bonar moved for approval of the agenda as submitted, seconded by Mr. Hutchison and unanimously carried. INTRODUCTION - WHY IS THIS RETREAT DIFFERENT? Mr. Scott Koenig, Interim City Manager, advised members that the purpose of the Financial Retreat was to review all financial models related to the electric system, the water and sewer system, and the general fund. He noted that a substantial amount of information was provided and there would be many challenges for the City. He anticipated that Council would have questions to which staff would not be prepared to respond, explaining that due to the detail involved, staff would need the opportunity to develop solutions through modeling for presentation at a later date. Ms. Kay Dietz-Sass, Public Affairs Coordinator, noted that, in order to keep the meeting flowing, all members were provided tablets to write their questions down during the presentation. She reminded members that Council and staff were working toward the same goal. REVIEW OF FINANCIAL MODEL - ELECTRIC FUND Mrs. Donna Mitchell, Controller/Treasurer, reviewed a Presentation - City of Dover Electric Revenue Fund - Updated Financial Projections for 2012 - 2016 (Exhibit #1). In response to Mrs. Williams regarding the Capacity Charges (Page 5 of Exhibit #1), Mrs. Mitchell explained that not all the figures listed were open positions and could be indicative of the amount budgeted for those charges. She stated that she was unable to determine if any of the capacity charges had increased; however, in most instances, it was the result of “open positions.” Mrs. Mitchell indicated she would be able to determine if these were open positions or if there are other factors playing into capacity charges in the near future. Referring to Page 6 of Exhibit #1, Mrs. Mitchell noted that the rate trends provided reflect the conclusion of the City’s agreement with Duke Energy and its transition to open market rates. It was her opinion that the City should conduct an electric rate study. She noted that the Power Cost Adjustment (PCA) credit provided each year is based on energy; therefore, none of the demands are being factored. Mrs. Mitchell felt that, due to changes in volume, a cost of service study should be conducted to “true up” the rates by class of customer. She stated that staff had a database that was set up by Burns and McDonnell and that once the kilowatt information was reconciled, she could obtain a quote for the cost to update the database. This would allow staff to “true up” the rates without having to go through a complete study (as is being done for the electric utility) and would be far less expensive.

COUNCIL FINANCIAL RETREAT OF NOVEMBER 9, 2011 PAGE 2 Responding to Mr. Hutchison, Mrs. Mitchell felt that the cost of service study could be completed in time for rates to be effective on July 1, 2012. REVIEW OF FINANCIAL MODEL - WATER/SEWER FUND Mrs. Mitchell reviewed a Presentation - City of Dover Water and Wastewater Fund - Updated Financial Projections for 2012 - 2016 (Exhibit #2). In response to Mrs. Williams, Mrs. Mitchell confirmed that 6.2% of the City’s water customers reside out of the city limits. Mr. Koenig advised members that during the last 15-20 years, there have not been substantial increases in water usage, explaining that the business sector has made processing improvements which, in some instances, have caused major changes in the City’s revenues. He stated that during the early 1980s, the Power Plant was pulling two (2) million gallons of water per day out of the system. Then operations went to Duke Energy and, over the years, the use of the Power Plant decreased. Noting that residential homes use an average of 300-500 gallons per day, he stated that there would need to be an astronomical number of houses in the City to compensate for this difference. Since the City sells less water than it did 20 years ago, the only means to increase revenue is to increase impact fees, rates, etc. Mr. Koenig explained that this trend has continued throughout the years, noting that in the early 2000s, Scott Paper made their own paper onsite and when this process ceased, the City’s revenue decreased by 600,000 gallons of water each day. When there has been an increase in T/gallons (thousands of gallons), he stated that this has been due to the weather. He stated that although a business may come to the City that would increase T/gallon sales, staff cannot develop the Capital Improvement Plan (CIP) based on this expectation and must consider an increase in rates, customer charges, impact fees, etc. Mrs. Williams questioned the possibility of increasing the rate for State of Delaware properties and the amount that would be required to avoid increasing rates for residents. Responding, Mr. Koenig stated his belief that the rate could not be raised high enough without the State contacting the Public Service Commission. Mrs. Williams felt that it would be necessary to become creative in developing rates in order to acquire the necessary funds. She relayed frustration with the State taking an enormous amount of land in parking around State buildings and noted that the City of Wilmington charges parking fees; however, Dover does not charge for parking. She reiterated the need to be creative in developing sources of revenue other than City customers and citizens. Mr. Hare noted that State facilities, churches, and other non-profit organizations are charged the same water rate as residents and that, unlike residents, these organizations are not subject to property taxes. He advised members that the University of Delaware provides the City of Newark approximately $1M in lieu of taxes each year. Although the State of Delaware provides the City of Dover $300,000 in lieu of taxes, very few of these other organizations pay any taxes. Mr. Koenig suggested that a change could be made to the structure to provide for different rate classifications for water based on the size of the meter. He cautioned members that this would also affect businesses such as Dover Downs, the Dover Mall, etc. Such a change would “eliminate” the

COUNCIL FINANCIAL RETREAT OF NOVEMBER 9, 2011 PAGE 3 municipal utility and create more of a public utility arena. Responding, Mr. Hare questioned the possibility of creating a new classification for non-taxpaying entities. Mr. Koenig suggested that staff review the suggestions discussed to determine if there would be any legal issues. REVIEW OF GRANT FUNDS Mrs. Mitchell reviewed a Presentation - City of Dover Overview of Special Revenue Funds - Police, Library, Housing, & Other Programs as of June 30, 2011(Exhibit #3). She noted that although these numbers were final as of June 30, 2011, the audit had not been completed. Referring to the Red Light Street Cameras, Police Chief Hosfelt indicated that the State selects the locations for the cameras. Mr. Bonar suggested that the City reintroduce legislation to allow for red light street cameras in the City this year. If that was not possible, he suggested that the City take action to have it instituted in January 2013. Responding to Mr. Lynn, Mrs. Mitchell stated that a Receipts/Expenditure Chart was not developed in connection with the Girls Circle and GAMES grant because there was only one (1) receipt and one (1) expenditure involved. For clarification, Mrs. Williams indicated that she does not receive any compensation for this program. Referring to the third bullet on Page 9 of Exhibit #3, Mr. Bonar questioned the possibility of charging for interfund services. Responding, Mrs. Mitchell stated that calculations would be necessary to determine amounts and noted that sometimes such amounts are based on grant fund stipulations. She noted that allocating indirect costs for federal funds would probably be more onerous to calculate than any amount gained to charge to the federal funds. However, she felt this could be beneficial for State funds. By unanimous consent, members took a brief recess. Meeting recessed at 6:43 p.m. and reconvened at 6:59 p.m. REVIEW OF FINANCIAL MODEL - GENERAL FUND Mrs. Mitchell reviewed a Presentation - City of Dover General Fund - Updated Financial Projections for 2012 - 2016 (Exhibit #4). She noted that conceptual ideas were included in the projections that would require additional staff work to finalize. Therefore, she emphasized that the information provided was not a final “picture” of where the City would be in 2013 and that direction from Council will be required. In response to Mr. Hare, Mr. Koenig stated that health insurance proposals should be received in early December for review by staff and that a recommendation to Council would be presented in January 2012.

COUNCIL FINANCIAL RETREAT OF NOVEMBER 9, 2011 PAGE 4 Due to increased needs for manpower inside City limits and general budget constraints, Mr. Koenig stated that the City was exiting the business of providing trash collection services to those who reside outside the City. Referring to the Sanitation Department, Mr. Koenig explained the concept of moving the department from the General Fund and creating an enterprise fund for the sanitation utility. He noted that this would relieve a $1M stress on the General Fund. In order for the service to be self-supporting, he stated that staff estimated the need for a monthly increase of $7.69. In addition, he stated that although he did not feel that privatization of sanitation was an option at this time, it may be something to consider in the future. Mr. Koenig stated that the creation of an enterprise fund would allow for a better evaluation to determine if privatization should be considered at a later date. Responding to Mrs. Williams, Mr. Koenig estimated a cost of $250,000 to provide curbside recycling to over 8,000 customers. He stated that the rules regarding recycling and yard waste separation would remain, regardless of privatization. Mrs. Mitchell referred to Page 6 of Exhibit #4 and relayed concern regarding the increase in expense and decrease in revenues. She explained that these recreation trends would require additional analysis and provided members with a memo dated October 24, 2011 from Mr. Zach Carter, Recreation Director, including attachments (Exhibit #5). Since attendance has been one-fourth to one-third of what was projected, she stated that there may be a need to consider raising fees for programs, marketing programs, etc. Mr. Koenig suggested a review of “in City” rates versus “out of City” rates. Noting that the last recreation study was conducted in 2004, he stated that the trends in recreation and programs offered have changed substantially since the study was completed, explaining that the desires of the recreation customers are constantly changing. It was his feeling that a financial goal should be established, such as to break even, operate at somewhat of a loss, etc., and some parameters should be laid out. He stated that this matter has not been reviewed since the opening of the Pitts Center and that there is a need to develop specific goals. In regard to the School Resource Officers (see Page 7 of Exhibit #4), Chief Hosfelt advised members that the City had a three (3) year Memorandum of Understanding (MOU) with both Dover High School and Central Middle School which expired in the last fiscal year. He stated that when he realized the date of the MOU’s expiration, it was too late in the year to approach the school district. He assured members that a meeting has been scheduled with Dr. Michael Thomas, Capital School District Superintendent, to resolve this matter. Responding to Mr. Bonar, Chief Hosfelt stated that when the School Resource Officers Program was initiated, there was an astronomical number of arrests and that arrests continue to decline each year. Mr. Hare questioned the possibility of utilizing retired police officers to serve as school resource officers in an attempt to reduce costs. Responding, Chief Hosfelt stated that the State of Delaware attempted to utilize retired police officers for such positions; however, they were not permitted since legislators had approved the use of retired officers for the sex offender program but not the school

COUNCIL FINANCIAL RETREAT OF NOVEMBER 9, 2011 PAGE 5 resource program. At the suggestion of Mr. Hare, Chief Hosfelt stated that he would review the possibility of hiring part-time, temporary police officers to serve in this capacity. Responding to Council President Leary, Chief Hosfelt stated that reimbursement of only one-half of the fees is customarily entered into the contract and explained that this could be adjusted. Mr. Hutchison relayed his support for school resource officers and explained his opinion that officers should be certified and not retired. Concurring, Mr. Lynn stated that it would be desirable to have officers in these positions to build rapport with the students and felt that this would be more difficult for retired officers. Although he also concurred with the need for the program, Mr. Hare explained his concern that the City of Dover could not afford to fund the program, whereas the school district could, and he suggested that payment be renegotiated for the future. Mrs. Mitchell referred to the Debt Service Options (Page 8 of Exhibit #4) and explained that in order to keep the new debt service level with the current debt service, there would be a 13 year payback. Mrs. Mitchell noted that Pages 8 and 9 of Exhibit #4 were provided at the request of City Council members (Page 8 - Mr. Hutchison and Page 9 - Mr. Bonar). She reiterated that the figures provided for the cost savings for payroll and Other Post-Employment Benefits (OPEB) were very, very rough estimates. In response to Mr. Hutchison, Mrs. Mitchell stated that, currently, the City pays 92% and employees pay 6.7% of monthly health insurance premiums. Requiring employees to pay 15% of the monthly premium would reduce the City’s payment to 85%. She stated that an analysis has been conducted on what the rate changes would be and it was determined that employees with family coverage would realize a cost savings and those with individual coverage would have an increase in cost (approximately $92 per month). Responding to Mr. Bonar, Mrs. Mitchell stated that currently, $1M is due to the City for property tax revenues; however, she stated that it was still very early in the year and anticipated that this amount would be greatly reduced by the end of the fiscal year. She noted that the outstanding balance was provided to members in the monthly report and that delinquent property taxpayers are listed on the City’s website. Mrs. Mitchell reviewed the Forecasting and Trend (Municast Program) and explained that a consultant created the program (Excel spreadsheet and database) which allows adjustments to be made to provide different scenarios and options to provide revenue and expense amounts based on selections. Responding to Mr. Lynn, Mrs. Mitchell stated that she would determine if there were any licensing issues and, if not, she would provide members the program so that each can “play” with the numbers and select different options and scenarios.

COUNCIL FINANCIAL RETREAT OF NOVEMBER 9, 2011 PAGE 6 Mrs. Mitchell indicated that staff would like to formalize some of the ideas and options to present to Council in the near future upon receipt of Council’s direction (to be incorporated in the model). Clarifying, Mr. Koenig noted that there was a $3.4M gap in one of the scenarios for the General Fund and felt that the gap could not be eliminated by “cutting” expenses; therefore, he anticipated that the scenario for eliminating the gap would include a full bundle of changes, including elimination of positions as well as rate and fee increases. He stated that he would like direction from Council in this regard. After much discussion, Council President Leary noted that Mrs. Mitchell would determine if the Municast Program could be provided to members of Council and, if so, each member would be provided a copy. Staff would develop a proposal and, in the meantime, Council could give staff input on different scenarios. Another Retreat session could then be scheduled to allow Council and staff to review this matter more thoroughly. Mrs. Kay Sass-Dietz relayed appreciation for the presentation provided by Mrs. Mitchell and the transparency of the information provided to members. There being no objections, Council President Leary declared the meeting adjourned. Meeting Adjourned at 8:36 P.M. Respectfully submitted, Thomas J. Leary Council President TJL/TM/jg S:\AGENDAS & MINUTES\Council-Minutes\2011\11-09-2011 FINANCIAL RETREAT.wpd Exhibits (attached to original and file copy) Exhibit #1 - Presentation - City of Dover Electric Revenue Fund - Updated Financial Projections for 2012 - 2016 Exhibit #2 - Presentation - City of Dover Water and Wastewater Fund - Updated Financial Projections for 2012 - 2016 Exhibit #3 - Presentation - City of Dover Overview of Special Revenue Funds - Police, Library, Housing, & Other Programs as of June 30, 2011 Exhibit #4 - Presentation - City of Dover General Fund - Updated Financial Projections for 2012 - 2016 Exhibit #5 - Memo Dated October 24, 2011 from Mr. Zach Carter, Recreation Director (including attachments)

EXHIBIT #1 Council Financial Retreat of 11/09/2011 City of Dover Electric Revenue Fund Updated Financial Projections 2012 - 2016 Council Retreat November 9, 2011 EXHIBIT #1 Prepared by Finance Department Council Financial Retreat of 11/09/2011

2 Key Assumptions • kWh demand forecast for FY12 increased 1.2% ▫ Aligned with FY10 and FY11 original budget ▫ FY11 actual was higher due to high seasonal heat rate • kWh demand for FY13 – FY16 kept flat • Continues current PCA credit 6.3% through FY15; 5.5% in FY16 • Continues current rates by customer class • Interest rates lowered to 1.25% • Projected Operating Expenses reported at FY12 level with the following exceptions: ▫ Currently no pay increases ▫ Increased health insurance premiums 6.0% (including retirees) ▫ Increased Pension normal cost 2% ▫ Increased OPEB normal cost 1.3% ▫ Continue to fully fund Electric Fund OPEB liability ▫ Pension contribution for unfunded liability as per previous actuary analysis • No new debt issuance • Adjustments to the previous annual appropriation to I & E Fund for CIP • Use of reserves to partially fund CIP

3

4

5

6 Rate Trends Average Average Average Average Date $ Increase % Increase PCA Adj % Adj 7/1/05 .0222 31.0% --- --- 1/1/06 .0072 6.0% --- --- 7/1/07 .0125 10.3% --- --- 7/1/08 .0107 8.0% --- --- 7/1/10 --- --- -.0028 -2.3% 7/1/11 --- --- -.00857 -6.3% Annual Chg. .0526 55.3% -.01137 -8.6% Fiscal Year 2006 – Retail Revenues $56.1 million Fiscal Year 2012 – Retail Revenues $99.9 million Increase 78.1% attributed to cost of power and increase demand

EXHIBIT #2 Council Financial Retreat of 11/09/2011 City of Dover Water and Wastewater Fund Updated Financial Projections 2012 – 2016 Council Retreat EXHIBIT #2 November 9, 2011 Prepared by Finance Department Council Financial Retreat of 11/09/2011

2 Key Assumptions • T/Gallons Growth ▫ 2011 +5.0% over FY10 (Power Plant running attributed to approx. 2.5%) ▫ 2012 Projection -2.5% under FY11 ▫ 2013 – 2016 Level with 2012 • Rate or fee increases projected for operating increases and financing capital projects • Continues the groundwater inflow surcharge to cover cost of County treatment fees and reduce budget deficit • Continues prior level of capital improvements to replace failing infrastructure • Projected Operating Expenses reported at same level as FY12 with the following exceptions: ▫ Currently no pay increases ▫ Increased health insurance premiums 6% ▫ Increased Pension Normal Cost 2% ▫ Increased OPEB normal cost with continuation of phase-in plan 1.6% ▫ Pension contribution for unfunded liability as per previous actuary analysis • County Treatment Fee Expenses projections kept level with FY11 • General Fund transfer is in accordance with policy 4.5% across all years • Impact Fees are projected to be used to pay debt service and some project cost • Includes transfers to Capital Project Fund each year for water quality and inflow/infiltration projects

3

4

5

6 Kent County Treatment Fees Trend of City Receipts & Expenses

7 Comparative CIP & Debt Projections

8

9

10

11 Revenue Requirements • Option 1 – Annual incremental increases attributed to debt service and operating cost ▫ Alt. A – Customer Charge from $1.25 to $2.50 ▫ Alt. B – Rate Increase (no customer charge increase)
FY14 – Water 8%
FY15 – Wastewater 5% • Option 2 – One-time increase to cover additional $1 Million per utility for water quality and inflow/infiltration line maintenance projects that will continue every year (rather than debt service) ▫ Alt. A – Customer Charge from $1.25 to $2.50
FY13 – Water 20%
FY13 – Wastewater 22% ▫ Alt. B – No change in Customer Charge
FY13 – Water 25%
FY13 – Wastewater 28% • Option 3 – Increase out of City rate at a greater percentage than in City rate Note – The City has 6.2% more water customers so the revenue ratios will differ

12

13 City Rate Trends In Out $ % Out $ % Water City City Chg Chg Sewer In City City Chg Chg 2005 $2.35 $3.53 2005 $1.90 $2.85 2006 $2.45 $3.68 .10 - .15 10.5% 2006 $2.10 $3.15 .20 - .30 10.5% 2007 $2.45 $3.68 2007 $2.10 $3.15 2008 $2.45 $3.68 2008 $2.10 $3.15 2009 $2.45 $3.68 2009 $2.10 $3.15 2010 $2.70 $4.05 .25 - .37 10.2% 2010 $2.10 $3.15 2011 $3.00 $4.50 .30 - .45 11.0% 2011 $2.65 $3.98 .55 - .83 26.2% 2006 Implemented $1.25 customer charge 2006 Implemented $1.25 customer charge 2011 Implemented $1.05 groundwater charge

14 Expense Budgets – 2008 thru 2012

EXHIBIT #3 Council Financial Retreat of 11/09/2011 City of Dover Overview of Special Revenue Funds Police, Library, Housing, & Other Programs As of June 30, 2011 Council Retreat November 9, 2011 EXHIBIT #3 Prepared by Finance Department Council Financial Retreat of 11/09/2011

2 Special Revenue Funds – June 30, 2011

3 Police Grants – June 30, 2011 • The City of Dover receives law enforcement grants provided by State and Federal Law Enforcement Agencies. Some are for specific designated activities and some are for law enforcement activities or program expenses as approved by the Chief of Police. Some grants are applied for and some are received based on available funding of the other entities. Some funding is received without any specific program in mind, therefore may not have been planned, and some are received as reimbursements to planned expenditures. Future expenses will be categorized by expense type rather than program expenses for clarity.

4 Library Grants • The City receives State Aid for Local Libraries as per Title 29, Chapter 66 – Contracts with Public Library System to promote the establishment and development of public library service • A formula is specified in the State Code as to the allocation of the State’s budgeting funding for Libraries. ▫ 40% based upon actual expenditures ▫ 40% on a per capita basis for person served ▫ 10% to fund statewide library services, cooperative planning and evaluation services, and to enable public libraries to meet standards ▫ Up to 10% to fund countywide or regional library services through anchor public libraries • Limitation on Division expenditures ▫ The Division will not pay for more than what was expended by the political subdivision ▫ If the state appropriations to the Division for services are not sufficient to meet the cost of approved contracts for services the allocation will be made by the formula as described above. ▫ If no monies are appropriated, no public library shall have any claim to any other moneys appropriated to the Division • This grant is to assist the City with the cost of providing Library Services and is expected to increase next fiscal year. • The level of City funding affects the State Aid based on the formula used above

5 Community Development Block Grant & Neighborhood Stabilization Program – June 30, 2011 • Grant receipts and expenditures represent the activities of the current fiscal year. They will not equal the amount approved in the annual action plans. • Beginning & Ending Fund Balances represent unexpended grant funds. • There will always be timing differences between federal grant years (9/30) and the City’s fiscal year (6/30).

6 CDBG Budget Development

7 Girls Circle & GAMES Grant • Delaware Criminal Justice • Grant receipts $46,616 Council provides grant funding • Grant Expenditures • Girls Circle Grant is for at-risk ▫ Contractual Services provided girls. by Aid In Dover $46,616 • The purpose of the GAMES Grant (Growing-Up and Meeting Each • Girls Circle Grant 1/1/10 - Success is to encourage youth to 12/31/10 (last yr of 3 yr grant) place increasing emphasis on ▫ Total $67,491 academic achievement and ▫ Federal $44,520 positive relationships ▫ Match $22,971 • The City is the sub-grantee • GAMES 9/1/10 -9/30/11 (1ST • Aid In Dover administers the yr of 3 yr grant) grants and provides matching funds through in-kind services ▫ Total $54,544 ▫ Federal $31,812 ▫ Match $22,732

8 Substance Abuse Prevention Grants • Mission ▫ To improve community alcohol, tobacco and other drug prevention programming in the City of Dover by providing multi-level program addressing the needs of individuals, families, communities and culture as they related to the problem of alcohol, tobacco and other drug abuse, school violence and teen pregnancy. • Program expenses consist of bus rental, video games and equipment, children’s activities, snacks, drinks, speakers or trainers. • This program is administered by Recreation staff.

9 Overall Grant Requirements • The following grant funds are budgeted – ▫ Municipal Street Aid ▫ Community Transportation Fund (DEL D.O.T. Grants) ▫ Community Development Block Grant ▫ Library ▫ Police • Federal OMB Circular A-133 requires audits of State, Local and Non-Profits if the programs are determined to be major programs • The City has not in the past charged grant funds for interfund services provided as we do the utility funds • Audit fees for all City funds are budgeted in the Finance Department • Due to the unexpected fees associated with the federal forfeiture and NSP grants last fiscal year the audit fees were charged to those funds • Each fund requires a separate set of accounts, monthly review, reconciliation and agency reporting requirements. DEL D.O.T. grants require separate Federal reporting to the U.S. Highway Administration. • All expenditures have to be certified by the Controller/Treasurer on State Grant reporting

EXHIBIT #4 Council Financial Retreat of 11/09/2011 City of Dover General Fund Updated Financial Projections 2012 – 2016 Legislative, Finance & Administrative Committee EXHIBIT #4 November 9, 2011 Prepared by Finance Department Council Financial Retreat of 11/09/2011

2 Where we left off – June 6, 2011 General Fund future budgets • Worker’s Compensation $505,000 (based on FY11 payroll) • Ladder Truck Payment $153,000 • Library additional operating cost approximately $400,000 when fully operational • Fully funding OPEB $5.9 million as compared to FY12 funding of $1.1 million for active employees & $1.4 million for retiree’s • Health Insurance premiums did not increase in FY12; FY13 ? • Future debt service payments and capital asset replacements is dependent on affordability

3 Included in Current Forecast Projection • All items as noted on June 6 ▫ Library operating cost increases as projects in the presentation on ▫ Re-instated the worker’s compensation expenses as a percentage of payroll ▫ Increased medical insurance premiums for FY12 based on the State’s estimate and the future years based on the actuary’s projected rates ▫ Increased OPEB cost based on actuary’s projected rates for the phase-in plan ▫ Ladder Truck is included in the Capital Investment Plan ▫ Debt Service increase for the Library and Street repaving program • Additional items included ▫ Insurance Premium increase on general and liability insurance ▫ City property reassessment (Range from $60,000 to $130,000); Projected $95,000 ▫ Utility transfer adjustments based on utility financial models ▫ Profit from out of City trash pick up – Discussion Only

4 OPEB Rates

5 Sanitation Utility Concept

6

7 Capital School District – School Resource Officers • Two officers assigned to Central Middle and Dover High Schools during the school year; Approx. 9 months ▫ Master Corporal – Salary & Benefits $107,580 @ 9 mos. = $80,685 ▫ Corporal – Salary & Benefits $102,160 @ 9 mos. = $76,620 ▫ Total $157,305 • Our letter of agreement for this service is negotiated with the School District on an annual basis • The expiring agreement reimburses the City $73,996 for this service

8 General Fund Debt Service Options

9

10 Cost Savings – Payroll & OPEB if eliminate Electric Department

11 Requires further research and analysis • Thorough review of current capital investment plan • Centralized Fleet – Consolidate fleet to reduce vehicle and equipment inventory and future capital cost ▫ Will require more pre-planning for Department Heads ▫ Will require a centralized location and maintenance shop to handle all inventory ▫ Possibility to free up existing warehouse space connected to Charter School ▫ May require financing plan for facility and start up cost ▫ Planning FY14, Construction FY15 & FY16 • City Manager’s reorganization plan • Collections of past due fees and fines • Health Insurance cost sharing – 15% of premium

EXHIBIT #5 Council Financial Retreat of 11/09/2011