Attachment

LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE AGENDA March 14, 2011 - 6:00 P.M. - Council Chambers - City Hall - City of Dover Public comments are welcomed on any item and will be permitted at appropriate times. When possible, please notify the City Clerk by phone at 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 2. Milliman Actuarial Analysis Updates A. Overview of Pension and OPEB (Other Post Employment Benefits) Liability for Fiscal Year 2010/11 B. Actuarial Pension for Fiscal Year 2010/11 and OPEB Benefit Rates for Fiscal Year 2011/12 Budget 3. Evaluation of Proposals A. Investment Manager and Advisory Services B. Investment Custody Services 4. Review of Hospitality and Civic Function Policy (Committee Deferred on February 28, 2011 Pending Additional Information) 5. FY 2012 Five-Year Capital Investment Plan (CIP) 6. Adjournment by 7:00 P.M. /tm S:\AGENDAS & MINUTES\Committee-Agendas\2011\03-14-2011 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.

Presented on March 14, 2011 by: Scott F. Porter, F.S.A., Donna Mitchell, Controller/Treasurer, City of Dover

 Civilian Pension Plan ◦ Investment return lowered from 7.5% to 7.0%; decrease in the salary increase from 4.5% to 4.0%; postretirement mortality table; changes in the retirement, turnover, and disability assumptions. These changes increased the unfunded Actuarial Accrued Liability (AAL) by $4.1 million and the Annual Required Contribution (ARC) by $0.2 million. The amortization of the unfunded AAL has been extended from a 15 year level percent of pay to a 25 year level dollar amortization (closed plan).  Police Pension Plan ◦ Investment return lowered from 7.5% to 7.0%; postretirement mortality table; These changes increased the unfunded Actuarial Accrued Liability (AAL) by $1.9 million and the Annual Required Contribution (ARC) by $0.23 million. The amortization of the unfunded AAL over 30 years b i f eginning 7/1/94 on a l closed basis. There are14 years remaining.  Other Postemployment Benefits (OPEB) ◦ Reflects the following assumption changes: investment return lowered from 7.5% to 7.0%; postretirement mortality table; healthcare trend assumption and percentage of members assumed to elect dependent coverage. The amortization of the unfunded AAL over 30 years (open). 2

 Assets – Estimated Investment Return ◦ General Plan – 12.3%; 2.6% on actuarial smoothed basis. ◦ Police Plan – 12.2% ◦ OPEB Plan – 2.2%  Membership ◦ Fewer deaths than expected ◦ More retirements than expected ◦ Fewer terminations than expected ◦ Smaller salary increases than expected  Contributions ◦ Fewer contributions than expected 3

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 Not required to record on the general ledger the total Actuarial Accrued Liability (AAL). Do have to disclose in each year’s Notes to the Financial Statements what these amounts are.  Annual Required Contributions (ARC) – the sum of normal cost (current year cost of active/ retired employees) plus the amortization payment for funding past unfunded cost of active/retired employees plus interest adjustment (i.e. for contributions made after BOY).  Not required to fund the ARC, however if you do not fund the ARC, or only partially fund the ARC, the unfunded portion has to be expensed in the City’s current year income statement and a liability for the obligation on the balance sheet by Fund – General, Water/Wastewater, & Electric. Can cause the City to miss its debt covenants.  The unfunded annual amount has to be recognized and accumulates in the liability for the obligation each year on the balance sheet. Therefore, not funding this will cause the City’s liabilities to grow and could result in a deficit fund balance over time.  Funding the ARC will prevent the accumulation of unfunded liabilities and any impact on the p City’s credit quality and our ability to issue debt and obtain the lowest possible interest rate, thus keeping down what we pay in interest cost.  Funding the ARC provides the employees/retirees with the security of having these benefits covered during their lifetime. The ARC goes into the Trust Funds and the benefits are paid out of the Trust Funds. If the money is not there we cannot pay the benefits.  These accounting requirements were implemented due to business entities and governments not addressing these issues and recognizing all of their obligations.  Actuarial valuations are required to be completed every two years and the ARC & AAL is adjusted to reflect positive or g j negative differences between assumptions and actual results. 5

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 Positive steps taken ◦ Council started funding the OPEB Trust Fund in 2004, prior to the required implementation of the OPEB accounting standard in 2009, recognizing its importance to the City, its employees/retirees and the credit markets. ◦ Council has in all past budgets included the actuarial determined percentages of payroll in its benefit rate to fund the annual required contributions for pensions. ◦ Council has included additional contributions to the Pension Funds when the funds were available. ◦ Council has continued to make the required lump sum contributions to the Police Plan. ◦ Council established the Health Benefits Committee to partner with employees and retirees in developing long-term solutions to help control cost and maintain quality health insurance coverage.  Action Item - Pension Funding ◦ To continue to keep up with actuarial contributions as we have done in previous years, staff is recommending we transfer $732,455 to the Civilian Pension Plan with $454,978 coming from the General Fund and $277,477 coming from the Electric Fund this fiscal year.  Action Item - OPEB Funding ◦ In order to maintain the 10 year phase-in plan for OPEB, staff is recommending we include in the FY12 budget the following percentages of base pay for the City’s OPEB contributions.  General Fund 6.6%  Water/Wastewater Fund 5.3%  Electric Fund 5.1% 9

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation FISCAL YEAR ENDING JUNE 30, 2011

1550 Liberty Ridge Drive Suite 200 Wayne, PA 19087-5572 Tel +1 610 687.5644 Fax +1 610.687.4236 www.milliman.com February 17, 2011 Ms. Donna Mitchell Controller/Treasurer City of Dover 5 E. Reed Street Weyandt Hall, Suite 300 Dover, DE 19901 Dear Ms. Mitchell: This report presents the results of the July 1, 2010 actuarial valuation for the City of Dover, Delaware General Employee Pension Plan for determining contributions for the fiscal year ending June 30, 2011. Purpose The main purposes of this report are: • to assess the relative funded position of the plan; and • to estimate the funding policy contribution for the fiscal year ending June 30, 2011; and • to provide the annual expense and balance sheet items for fiscal year ending June 30, 2011 according to GASB 27. Actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the City. Actuarial computations presented in this report under GASB Statements No. 25 and 27 are for purposes of fulfilling financial accounting requirements. The calculations in the enclosed report have been made on a basis consistent with our understanding of the City’s funding requirements and goals. The calculations in this report have been made on a basis consistent with our understanding of the plan provisions described in this report, and of GASB Statements No. 25 and 27. Determinations for purposes other than meeting these requirements may be significantly different from the results contained in this report. Accordingly, additional determinations may be needed for other purposes. Milliman’s work is prepared solely for the internal business use of the City. To the extent that Milliman's work is not subject to disclosure under applicable public records laws, Milliman’s work may not be provided to third parties without Milliman's prior written Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.

Ms. Donna Mitchell February 17, 2011 Page 2 consent. Milliman does not intend to benefit or create a legal duty to any third party recipient of its work product. Milliman’s consent to release its work product to any third party may be conditioned on the third party signing a Release, subject to the following exception: • The City may provide a copy of Milliman’s work, in its entirety, to the City's professional service advisors who are subject to a duty of confidentiality and who agree to not use Milliman’s work for any purpose other than to benefit the City. No third party recipient of Milliman's work product should rely upon Milliman's work product. Such recipients should engage qualified professionals for advice appropriate to their own specific needs. The consultants who worked on this assignment are pension actuaries. Milliman’s advice is not intended to be a substitute for qualified legal or accounting counsel. Data Reliance In performing this analysis, we relied on data and other information (both written and oral), such as the plan provisions, provided by City of Dover, Delaware. We have not audited or verified this data and other information. If the underlying data or information is inaccurate or incomplete, the results of our analysis may likewise be inaccurate or incomplete. We performed a limited review of the data used directly in our analysis for reasonableness and consistency and have not found material defects in the data. If there are material defects in the data, it is possible that they would be uncovered by a detailed, systematic review and comparison of the data to search for data values that are questionable or for relationships that are materially inconsistent. Such a review was beyond the scope of our assignment. Variability of Results Future actuarial measurements may differ significantly from the current measurements presented in this valuation due to actual plan experience deviating from the actuarial assumptions, the natural operation of the plan’s actuarial cost method (such as the expiration of an amortization period or additional cost or contribution requirements based on the plan’s funded status), and changes in plan provisions, actuarial assumptions, and applicable law. An assessment of the potential range and cost effect of such differences is beyond the scope of this project. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.

Ms. Donna Mitchell February 17, 2011 Page 3 Certification We hereby certify that, to the best of our knowledge, this report is complete and accurate and all costs and liabilities were determined in conformance with generally accepted actuarial principles and practices based on our understanding of the benefits provided by the City and the requirements of GASB 27, which are consistent with the principles prescribed by the Actuarial Standards Board, the Code of Professional Conduct, and the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States of the American Academy of Actuaries. We further certify that all costs and liabilities have been determined on the basis of actuarial assumptions and methods which are individually reasonable (taking into account the experience of the Plan where available and reasonable expectations); and which, in combination, offer our best estimate of anticipated experience affecting the Plan. GASB 25 and 27 allows employers to select from six actuarial cost methods in determining the Annual Required Contribution. The Entry Age Normal Cost Method with aggregation is used in this valuation. The valuation date is the date that all participant and other pertinent information is collected and liabilities are measured. This date may not be more than 24 months prior to the beginning of the fiscal year. The valuation date for this valuation is July 1, 2010. Furthermore, GASB 25 and 27 requires actuarial valuations to occur at least biennially. Therefore, the results of this valuation may be used for the 2011 fiscal year and be the basis for the 2012 fiscal year, unless significant changes occur that would affect the results of this valuation. Assuming no significant changes, the next valuation would be for the 2013 fiscal year. We are members of the American Academy of Actuaries and meet its qualification standards to render this actuarial opinion. Respectfully submitted, MILLIMAN, INC. By: Tim Nugent, F.S.A. Member American Academy of Actuaries By: Scott F. Porter, F.S.A. Member American Academy of Actuaries GDB:SFP:mlm\078DVR01-10 g:\corr11\dvr\dvrval2010_genpen.doc Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation TABLE OF CONTENTS Page SECTION I - SUMMARY OF RESULTS 1 SECTION II - EXHIBITS 5 SECTION III - CENSUS DATA 14 SECTION IV - SUMMARY OF PRINCIPAL PLAN PROVISIONS 16 SECTION V - ACTUARIAL ASSUMPTIONS AND METHODS 19 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION I – SUMMARY OF RESULTS Executive Summary The Annual Required Contribution (ARC) increased from $2.56 million for the fiscal year ending June 30, 2010 to $3.15 million for the fiscal year ending June 30, 2011 for the General Employee Pension Plan. The ARC comprises the Normal Cost and an amortization of the Unfunded Accrued Liability plus an interest adjustment. The Normal Cost is based on Aggregate Entry Age Normal Cost Method. This method allocates the present value of future City normal costs over future payroll. The portion applicable to the current year is based on the expected payroll for the year. Since the plan is closed to new hires, the expected payroll reflects expected terminations and retirements during the year. The normal cost rate increased from 4.15% based on the 2009 actuarial valuation to 4.67% based on the 2010 actuarial valuation. As of July 1, 2010, the normal cost is $0.36 million including an interest adjustment. The amortization payment is based on a 25-year (closed) amortization of the unfunded liability. The amortization payment is $2.61 million and the interest adjustment is $0.18 million. The Unfunded Accrued Liability increased from $25.65 million as of July 1, 2009 to $32.50 million as of July 1, 2010. As of July 1, 2010, the funded ratio is 38.1% based on the actuarial value of assets and 33.7% based on the market value of assets. The increase in the normal cost rate and unfunded liability are primarily due to 1) assumption changes, 2) actuarial losses and 3) City and State contributions less than the ARC during the prior year. These items also resulted in an increase in the ARC, which was offset by a change in the amortization method from a 15-year level percent of pay to a 25-year level dollar amortization. A level dollar amortization is used since the plan is closed to new hires. The assumptions changes are 1) a decrease in the investment return assumption from 7.5% to 7%, 2) a decrease in the salary increase assumption from 4.5% to 4.0%, 3) a change in the postretirement mortality table from the 1983 Group Annuity Mortality Table to the RP-2000 Healthy Annuitant Mortality Table with generational projection of mortality improvements and 4) changes in the retirement, turnover and disability assumptions. These changes are consistent with the assumptions used in the July 1, 2010 OPEB actuarial valuation. The changes in the actuarial assumptions increased the unfunded liability by $4.1 million and the ARC by $0.2 million. The actuarial losses are due the actuarial value of assets earning less than expected, fewer deaths and terminations than expected and more retirements than expected. These losses were partially offset by an actuarial gain on salary increases less than expected. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 1

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION I – SUMMARY OF RESULTS (Continued) The market value of assets estimated rate of return during the prior year of 12.31%. However for purposes of determining contributions, asset gains and losses are smoothed in over a 5-year period. Due to asset losses in prior years, the estimated return on the actuarial value of assets is 2.62%, which is less than the assumed return of 7.5% resulting in an actuarial loss. As of July 1, 2010, the actuarial value of assets is 112.8% of market value. Unless future investment gains are experienced, recognition of these deferred losses will increase the contribution requirements in the near future. The Annual Pension Cost for the fiscal year ending June 30, 2011 is equal to the ARC plus interest less an amortization on the Net Pension Obligation as of the beginning of the year. The amortization component is known as the Adjustment to the ARC. The Annual Pension Cost for the fiscal year ending June 30, 2011 is $3.15 million. The Net Pension Obligation/ (Asset) is the accumulated difference between the Annual Pension Cost each year and the actual contributions made to the trust by the City and State to fund the plan. The Net Pension Asset as of June 30, 2010 is $0.15 million and is expected to decrease to a Net Pension Obligation of $0.46 million as of June 30, 2011 based on the expected contributions during the fiscal year. The expected contributions were assumed to equal 4.15% of payroll plus $2.2 million. The actual Net Pension Obligation will reflect actual contributions made during fiscal year 2011. Funding Policy The City makes payroll based contributions equal to the normal cost rate for members in the plan. The City will also make lump sum contributions to pay the amortization of the unfunded liability. The ARC is based on an amortization of the unfunded actuarial accrued liability over 25 years beginning July 1, 2010 on a closed basis. Contributions are made in the following fiscal year. Expected contributions for the fiscal year ending June 30, 2011 are estimated to be $2.54 million, which is 81% of the ARC for the fiscal year ending June 30, 2011. This estimate is based on the normal cost rate from the 2009 valuation of 4.15% and a lump sum contribution of $2.2 million. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 2

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION I – SUMMARY OF RESULTS (Continued) Valuation Date The valuation date is the date that all participant and other pertinent information is collected and liabilities are measured. This date may not be more than 24 months prior to the beginning of the fiscal year. The valuation date for this valuation is July 1, 2010 which is at the beginning of the 2011 fiscal year. This is consistent with the prior valuation completed as of July 1, 2009 for the 2010 fiscal years. The results of this valuation may be used for the 2011 fiscal year and be the basis for the 2012 fiscal year, unless significant changes occur that would affect the results of this valuation. Assuming no significant changes, the next valuation would be for the 2013 fiscal year, based on a July 1, 2012 valuation date. Discussion of Supporting Exhibits Exhibit 1 summarizes the assets as of June 30, 2010 and the change in assets from the prior year. Exhibit 2 develops the actuarial value of assets as of July 1, 2010 and displays the estimated rates of return for the last three years on the market value and actuarial value of assets. Exhibit 3 summarizes the actuarial experience for the year ending June 30, 2011. In total, the plan experienced an actuarial loss of $2.59 million. The exhibit also shows the change in the funded ratio from 43.7% as of July 1, 2009 to 38.1% as of July 1, 2010. Exhibit 4 develops the normal cost rate of 4.67% for the fiscal year ending June 30, 2011. The development of this rate accounts for expected terminations and retirements during the year. Exhibit 5 summarized the unfunded actuarial accrued liability by Fund. The actuarial accrued liability by Fund is calculated directly with 52% attributable to the General Fund, 8% attributable to the Water/Wastewater Fund and 40% attributable to the Electric Fund. The actuarial value of assets is allocated to each of the Funds such that the funded ratio is the equivalent. Exhibit 5 also summarizes the normal cost attributable to each Fund based on the expected payroll of the active members allocated to each Fund. Exhibit 6 summarizes the development of the ARC and the Annual Pension Cost for the fiscal year ending June 30, 2011 by Fund. The Annual Pension Cost is equal to the ARC less an amortization of the Net Pension Obligation. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 3

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION I – SUMMARY OF RESULTS (Continued) Exhibit 7 summarizes the estimated Net Pension Obligation of $0.46 million as of June 30, 2011. The Net Pension Obligation shown is based on total contributions made to the plan equal to 4.15% of payroll plus $2.2 million. The actual Net Pension Asset will reflect actual contributions made during the fiscal year. Exhibit 8 displays the required supplementary schedules: Schedule of Funding Progress and the Schedule of Employer Contributions. Exhibit 9 summarizes the expected benefit payments from the plan projected over the next 10 fiscal years. Census Data Section III summarizes the census data provided by the City utilized in the preparation of the actuarial valuation. The section shows an age benefit profile of the retirees receiving benefits as of July 1, 2010. Summary of Principal Plan Provisions Section IV summarizes the principal plan provisions as of the valuation date utilized in the preparation of this actuarial valuation. This information was supplied through various correspondences with the City. Actuarial Assumptions and Methods Section V summarizes the actuarial assumptions and methods utilized in the preparation of this actuarial valuation. The liabilities provided in this report are heavily dependent upon the assumptions utilized, especially regarding annual per capita costs and healthcare trend. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 4

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION II – EXHIBITS Market Value of Assets as of June 30, 2010 Assets Cash equivalents $369,729 Mutual Funds 17,350,548 Total $17,720,277 Liabilities Accounts payable (14,389) Total (14,389) Net Assets $17,705,888 Change in Market Value of Assets Market Value of Assets as of June 30, 2009 $16,174,687 Income City's contributions 2,270,623 Employee contributions 294,599 Investment and other income 1,963,709 Total 4,528,931 Disbursements Benefit payments and contribution refunds (2,971,343) Administrative Expenses (26,387) Total (2,997,730) Net increase/ (decrease) 1,531,201 Market Value of Assets as of June 30, 2010 $17,705,888 Estimated rate of return 12.31% Exhibit 1 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 5

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION II – EXHIBITS Development of Actuarial Value of Assets Unexpected Returns Year Expected Actual Unexpected Percentage Amount Ending Return Return Return Weight Deferred 2010 $ 1,196,882 $ 1,963,709 $ 766,827 80% $ 613,462 2009 1,375,234 (2,172,453) (3,547,687) 60% (2,128,612) 2008 1,443,222 (1,157,304) (2,600,526) 40% (1,040,210) 2007 1,199,743 2,688,851 1,489,108 20% 297,822 Total $ 5,215,081 $ 1,322,803 $ (3,892,278) $ (2,257,538) Market Value of Assets as of June 30, 2010 17,705,888 Actuarial Value of Assets as of June 30, 2010 19,963,426 Ratio of Actuarial Value to Market Value 112.8% Estimated rate of return 2.62% Estimated Historical Rates of Return Market Actuarial Fiscal Year Ending Value Value June 30, 2010 12.31% 2.62% June 30, 2009 -11.85% 2.46% June 30, 2008 -6.01% N/A 3 - Year Average -2.37% 2.54% Exhibit 2 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 6

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION II – EXHIBITS Actuarial Experience for Year Ending June 30, 2010 Actuarial Accrued Liability BOY $45,525,384 Actuarial Value of Assets BOY 19,880,033 Unfunded Accrued Liability BOY 25,645,351 Funded Ratio BOY 43.7% Gross Normal Cost BOY 711,000 Interest 1,976,726 Contributions Made (2,565,222) Increases in UAL due to: Plan Changes - Assumption Changes 4,139,586 Method Changes - Total 4,139,586 Expected UAL 29,907,441 Actuarial Accrued Liability EOY $52,462,693 Actuarial Value of Assets EOY 19,963,426 Unfunded Accrued Liability EOY 32,499,267 Funded Ratio EOY 38.1% (Gain)/Loss 2,591,826 Exhibit 3 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 7

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION II – EXHIBITS Development of Normal Cost Rate For Fiscal Year Ending June 30, 2011 Present Value of Benefits $57,442,053 Actuarial Accrued Liability 52,462,693 Present Value of Future Gross Normal Costs 4,979,360 Member Contributions 2,221,728 City Normal Costs 2,757,632 Present Value of Future Payroll 67,581,787 Normal Cost Rate 4.08% Expected Member Payroll 8,256,751 City Normal Cost 336,875 Expected Payroll for Fiscal Year 7,724,085 Adjusted Normal Cost Rate w/ Interest 4.67% The adjusted normal cost rate accounts for the expected terminations and retirements during the year since the plan is closed to new hires. Exhibit 4 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 8

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION II – EXHIBITS Allocation of Unfunded Actuarial Accrued Liability by Fund as of July 1, 2010 (110) (412) (480) General Water Electric Fund Fund Fund Total Actives $11,747,515 $1,265,920 $5,797,425 $18,810,860 Deferred Vesteds 154,142 70,153 235,324 459,619 Retirees 15,375,440 2,959,156 14,857,618 33,192,214 Total Actuarial Accrued Liability 27,277,097 4,295,229 20,890,367 52,462,693 Actuarial Value of Assets 10,379,648 1,634,447 7,949,331 19,963,426 Unfunded Actuarial Liability 16,897,449 2,660,782 12,941,036 32,499,267 Funded Ratio 38.1% 38.1% 38.1% 38.1% Allocation of Normal Cost by Fund for the Fisal Year Ending June 30, 2011 Normal Cost Rate 4.67% 4.67% 4.67% 4.67% Expected Payroll for Fiscal Year $5,086,296 $658,414 $1,979,375 $7,724,085 Normal Cost 237,530 30,748 92,437 360,715 Certain retirees are allocated to multiple funds according to the following percentages: General Fund 39%, Water/Wastewater Fund 16% and Electric Fund 45%. Actuarial Value of Assets are allocated to each Fund such that the funded ratio is equivalent. The Normal Cost Rate is determined in total and allocated by expected payroll. Exhibit 5 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 9

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION II – EXHIBITS Annual Required Contribution For Fiscal Year Ending June 30, 2011 (110) (412) (480) General Water Electric Fund Fund Fund Total Actuarial Accrued Liability $27,277,097 $4,295,229 $20,890,367 $52,462,693 Actuarial Value of Assets 10,379,648 1,634,447 7,949,331 19,963,426 Unfunded Liability 16,897,449 2,660,782 12,941,036 32,499,267 Normal Cost $237,530 $30,748 $92,437 $360,715 Amortization Payment 1,355,120 213,386 1,037,829 2,606,335 Interest at 7.00% 94,858 14,937 72,648 182,443 Annual Required Contribution 1,687,508 259,071 1,202,914 3,149,493 Annual Pension Cost For Fiscal Year Ending June 30, 2011 Net Pension Obligation/(Asset) BOY ($64,093) ($28,080) ($55,295) ($147,468) Annual Required Contribution 1,687,508 259,071 1,202,914 3,149,493 Interest on Net Pension Obligation (4,487) (1,966) (3,871) (10,324) Adjustment to ARC 5,500 2,410 4,745 12,655 Annual Pension Cost 1,688,521 259,515 1,203,788 3,151,824 The ARC is based on a discount rate of 7% and a 25-year amortization (closed) of the unfunded liability. Exhibit 6 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 10

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION II – EXHIBITS Estimated Net Pension Obligation as of June 30, 2011 (110) (412) (480) General Water Electric Fund Fund Fund Total Net Pension Obligation BOY ($64,093) ($28,080) ($55,295) ($147,468) Annual Pension Cost 1,688,521 259,515 1,203,788 3,151,824 Estimated Contributions 1,222,000 400,000 920,000 2,542,000 Expense Difference 466,521 (140,485) 283,788 609,824 Estimated Net Pension Obligation EOY 402,428 (168,565) 228,493 462,356 The estimated Net Pension Obligation as of June 30, 2011 assumes contributions will equal 4.15% of payroll plus $2.2 million Exhibit 7 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 11

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION II – EXHIBITS Schedule of Funding Progress Actuaral Actuarial Unfunded UAL as a % Valuation Value of Accrued Accrued Funded Covered of Covered Date Assets Liability Liability Ratio Payroll Payroll 7/1/2010 $19,963,426 $52,462,693 $32,499,267 38.1% $8,256,751 393.6% 7/1/2009 19,880,033 45,525,384 25,645,351 43.7% 8,786,981 291.9% 7/1/2008 19,381,391 43,800,212 24,418,821 44.2% 8,716,361 280.1% 7/1/2007 17,616,172 42,335,142 24,718,970 41.6% 8,006,103 308.8% 7/1/2006 15,712,605 41,103,526 25,390,921 38.2% 7,612,121 333.6% 7/1/2005 16,277,640 39,860,241 23,582,601 40.8% 7,380,629 319.5% Schedule of Employer Contributions Annual Fiscal Pension Percentage NPO (Asset) Year End Cost Contributed EOY 6/30/2011 * $3,151,824 80.7% $462,356 6/30/2010 2,568,198 88.4% (147,468) 6/30/2009 2,358,663 105.6% (446,423) Annual Fiscal Required Percentage Year End Contribution Contributed 6/30/2011 * $3,149,493 80.7% 6/30/2010 2,564,767 88.5% 6/30/2009 2,356,529 105.7% 6/30/2008 2,269,802 128.1% 6/30/2007 2,231,594 124.0% 6/30/2006 2,022,614 86.0% * Contributions for fiscal year 2011 are estimated to equal 4.15% of payroll plus $2.2 million. Exhibit 8 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 12

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION II – EXHIBITS Expected Benefit Payments by Fiscal Year Fiscal Year Amount 2011 $ 3,178,000 2012 3,222,000 2013 3,272,000 2014 3,331,000 2015 3,395,000 2016 3,447,000 2017 3,526,000 2018 3,611,000 2019 3,728,000 2020 3,859,000 Exhibit 9 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 13

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION III – CENSUS DATA Summary of Active Data as of July 1, 2010 Number of Participants by Age and Service Groups Years of Service Age <1 1-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40&Up Total 0-24 - 10 1 - - - - - - - 11 25-29 - 7 5 - - - - - - - 12 30-34 - 14 6 2 - - - - - - 22 35-39 - 8 4 4 1 1 - - - - 18 40-44 - 5 11 6 3 4 1 - - - 30 45-49 - 5 5 1 5 12 4 1 - - 33 50-54 - 2 7 - 6 5 2 3 - - 25 55-59 - 4 3 4 4 4 - 1 - - 20 60-64 - 1 1 3 2 1 - - - - 8 65-69 - - - - - - - 1 - - 1 70&Up - - - - - - - - - - - Total - 56 43 20 21 27 7 6 - - 180 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 14

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION III – CENSUS DATA Summary of Inactive Data as of July 1, 2010 Participants with Deferred Benefits Number of Monthly Age Participants Benefit Amount < 30 0 $0 30 - 34 0 0 35 - 39 1 1,084 40 - 44 1 798 45 - 49 4 3,375 50 - 54 4 3,139 55 - 59 2 538 60 - 64 1 683 65 & Up 0 0 Total 13 $9,617 Participants in Pay Status Number of Monthly Age Participants Benefit Amount < 55 28 $51,205 55 - 59 31 49,707 60 - 64 31 58,517 65 - 69 27 34,580 70 - 74 19 17,476 75 - 79 30 24,708 80 - 84 15 15,008 85 - 89 4 3,521 90 & Up 3 1,247 Total 188 $255,969 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 15

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION IV – SUMMARY OF PRINCIPAL PLAN PROVISIONS as of JULY 1, 2010 1) Type of Plan: The Plan is a contributory, defined benefit plan. Effective, May 1, 1994, contributions by members are 3½% of the actual average monthly earnings and are deducted on a payroll basis. 2) Eligibility for Membership: Full-time employment (at least 37 ½ hours worked per week) with the City. Effective May 1, 1994, employees may make an irrevocable decision to join the Deferred Compensation Plan and forfeit participation in the pension plan. Effective September 28, 2009, participation in the pension plan is closed (i.e. no new members can become participants). 3) Definitions: a) Continuous Service: Continuous Service is earned for full-time employment with the City. A member who terminates and is rehired within 5 years may have service restored if reemployed within 90 days, reemployed for 5 years if had less than 20 years of continuous service or reemployed for 2 years if had at least 20 years of continuous service. Any contributions withdrawn must be repaid with interest. b) Earnings: Base pay plus scheduled overtime and payment for being on-call, except hours called out. c) Average Monthly Earnings: 36 consecutive months in the final ten years of continuous service, which results in the highest average, no less than $150. d) Eligible Survivor: The member’s spouse of at least one year and not domiciled apart at the date of death or surviving children under the age of 18. 4) Retirement Benefits a) Unreduced Retirement Eligibility: Satisfaction of either of the following eligibility requirements: (1) Later of attainment of age 65 and completion of 10 years of Continuous Service (normal retirement). (2) If hired prior to May 1, 1994, later of attainment of age 50 and completion of 20 years of Continuous Service. (3) If hired prior to May 1, 1994, completion of 25 years of Continuous Service. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 16

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION IV – SUMMARY OF PRINCIPAL PLAN PROVISIONS as of JULY 1, 2010 (Continued) (4) If hired on or after May 1, 1994, later of attainment of age 55 and completion of 80 points (age plus Continuous Service). Benefit: 1/50th of Average Monthly Earnings times Continuous Service. b) Reduced Retirement: Eligibility: Attainment of age 55 and completion of 10 years of Continuous Service. Benefit: The Unreduced Retirement Benefit reduced 6% for each year the early retirement date precedes age 65. c) Termination Benefits: Eligibility: Termination of service other than for reasons of retirement, death or disability. Benefit: For members with at least 10 years of continuous service, the Unreduced Retirement Benefit payable at age 65. Refund: Accumulated contributions with interest accumulated at 5% will be refunded on the 90th day following termination upon request or automatically after 5 years for non-vested participants. Vested participants may elect a refund in lieu of the deferred vested benefit. d) Disability Benefits: Eligibility: Total and permanent disability and completion of 10 years of Continuous Service. Benefit: The Unreduced Retirement Benefit payable immediately. The benefit ceases if the participant has recovered, refuses an examination or attains age 65, at which time the normal retirement benefit commences of the same amount. e) Death Benefits: Eligibility: Currently retired, eligible to retire with an unreduced or reduced benefit or completion of at least 20 years of service. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 17

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION IV – SUMMARY OF PRINCIPAL PLAN PROVISIONS as of JULY 1, 2010 (Continued) Benefit: 50% of the benefit the member was receiving or entitled to receive. Benefits for members not eligible for unreduced retirement will be reduced 6% per year from age 65, but no less than $200 per month. Benefit is payable immediately to an Eligible Survivor and ceases upon the earliest of death, remarriage or attainment of age 18 for children. Refund: For ineligible members, accumulated contributions with interest accumulated at 5% will be refunded to a designated beneficiary or estate. For retired members and Eligible Survivors, if the monthly benefit payments received in the aggregate are less than the accumulated contributions, the balance of the accumulated contributions will be refunded to a designated beneficiary or estate. 5) Changes in Plan Provisions: Effective September 28, 2009, the plan was closed to new employees. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 18

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION V - SUMMARY OF ACTUARIAL ASSUMPTIONS AND METHODS A. Actuarial Assumptions Interest Rate: 7% per annum, compounded annually. Salary Scale: 4% per annum, compounded annually. Valuation Compensation: Rate of pay as of July 1, 2010. Future Increases on IRS Limits on Compensation and Benefits: 2.75% Termination: Withdrawal rates vary by union status, age, and service. No terminations are assumed once a member is eligible for reduced or unreduced retirement. Illustrative rates are shown below. Nonunion Age Union <3 Years 3 – 4 Years 5+Years 25 10.0% 30.0% 27.0% 25.5% 30 9.4 30.0 27.0 23.4 35 8.2 30.0 27.0 20.3 40 6.7 30.0 27.0 16.6 45 5.2 30.0 27.0 12.5 50 3.3 30.0 27.0 7.5 55 1.2 30.0 27.0 2.6 Retirement: Rates of retirement vary by union, age and eligibility for unreduced retirement. No reduced retirements are assumed. Illustrative rates are shown below. Hired Hired Hired Hired pre 5/94 pst 5/94 pre 5/94 pst 5/94 Age Age 50-51 4% 0% 62 25% 20% 52-54 8 0 63-64 25 15 55-57 8 6 65 25 50 58 10 6 66 50 50 59 15 6 67-69 100 50 60 20 10 70 100 100 61 25 10 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 19

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION V - SUMMARY OF ACTUARIAL ASSUMPTIONS AND METHODS (Continued) Disability: None assumed. Mortality: Healthy Lives: RP-2000 Healthy Annuitant Mortality Table projected on a generational basis using Scale AA. The Employee table is used for pre-retirement. Rates vary by age and gender. Marriage: Husbands are assumed to be 3 years older than wives. Among the active population, 70% of males and 55% of females are assumed to be married. This percentage is not individually explicit, but is considered reasonable, when viewed in the aggregate. Form of Payment: For assumed married members, 50% joint and survivor annuity. Actual marital status used for retirees. For other members, a 2- year certain and life to approximate the value of the modified cash refund. Special Data Adjustments: Interest on contributions was estimated based on a 5% interest crediting rate for half of the members Continuous Service as of the valuation date. B. Actuarial Cost Method The Entry Age Normal Method was used for determining the actuarial accrued liability. Under this method, a projected benefit is determined at each active participant’s assumed retirement age assuming future compensation increases. The plan’s accrued liability is the sum of (a) the accumulation of each active participant’s normal costs attributable to all prior years of service plus (b) the present value of each inactive participant’s future benefits. Aggregation is used in determining the plan’s normal cost. Under this method, the plan’s normal cost is determined by first calculating the present value of future normal costs as the excess of the present value of benefits over the sum of the unfunded liability, the actuarial value of assets, and the present value of any future employee contributions. A normal cost accrual rate is then determined as the present value of future normal costs divided by the sum of the present value of each active participant’s future compensation. The plan’s normal cost is finally determined by multiplying the total compensation of active participants under the assumed retirement age by the normal cost accrual rate. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 20

CITY OF DOVER, DELAWARE General Employee Pension Plan Actuarial Valuation SECTION V - SUMMARY OF ACTUARIAL ASSUMPTIONS AND METHODS (Continued) C. Asset Valuation Method The Asset Valuation method smoothes gains and losses over a 5-year period. The formula for the asset valuation method is as follows: Actuarial Value of Assets = MVt - .8UR1 - .6UR2 - .4UR3 - .2UR4 Where MVt = Market Value of assets as of the valuation date. URn= Unexpected return during the nth year preceding the valuation date. The unexpected return for a year equals the total investment return minus the total expected return. The total expected return equals the market value of assets at the beginning of the year plus the weighted net cash flow during the year multiplied by the expected rate of return. D. Changes in Actuarial Assumptions or Methods • The interest rate was decreased 50 basis points from 7.5% to 7.0%. • The salary increase assumption was decreased 50 basis points from 4.5% to 4.0%. • All demographic assumptions (withdrawal, retirement, disability and mortality) were modified to match the assumptions used in the July 1, 2010 OPEB valuation. • The percentage of members assumed to be married decreased from 80% to 70% for males and 55% for females and the difference in assumed age difference between males and females decreased from 4 years to 3 years. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 21

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation FISCAL YEAR ENDING JUNE 30, 2011

1550 Liberty Ridge Drive Suite 200 Wayne, PA 19087-5572 Tel +1 610 687.5644 Fax +1 610.687.4236 www.milliman.com February 17, 2011 Ms. Donna Mitchell Controller/Treasurer City of Dover 5 E. Reed Street Weyandt Hall, Suite 300 Dover, DE 19901 Dear Ms. Mitchell: This report presents the results of the July 1, 2010 actuarial valuation for the City of Dover, Delaware Police Pension Plan for determining contributions for the fiscal year ending June 30, 2011. Purpose The main purposes of this report are: • to assess the relative funded position of the plan; and • to estimate the funding policy contribution for the fiscal year ending June 30, 2011; and • to provide the annual expense and balance sheet items for fiscal year ending June 30, 2011 according to GASB 27. Actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the City. Actuarial computations presented in this report under GASB Statements No. 25 and 27 are for purposes of fulfilling financial accounting requirements. The calculations in the enclosed report have been made on a basis consistent with our understanding of the City’s funding requirements and goals. The calculations in this report have been made on a basis consistent with our understanding of the plan provisions described in this report, and of GASB Statements No. 25 and 27. Determinations for purposes other than meeting these requirements may be significantly different from the results contained in this report. Accordingly, additional determinations may be needed for other purposes. Milliman’s work is prepared solely for the internal business use of the City. To the extent that Milliman's work is not subject to disclosure under applicable public records Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.

Ms. Donna Mitchell February 17, 2011 Page 2 laws, Milliman’s work may not be provided to third parties without Milliman's prior written consent. Milliman does not intend to benefit or create a legal duty to any third party recipient of its work product. Milliman’s consent to release its work product to any third party may be conditioned on the third party signing a Release, subject to the following exception: • The City may provide a copy of Milliman’s work, in its entirety, to the City's professional service advisors who are subject to a duty of confidentiality and who agree to not use Milliman’s work for any purpose other than to benefit the City. No third party recipient of Milliman's work product should rely upon Milliman's work product. Such recipients should engage qualified professionals for advice appropriate to their own specific needs. The consultants who worked on this assignment are pension actuaries. Milliman’s advice is not intended to be a substitute for qualified legal or accounting counsel. Data Reliance In performing this analysis, we relied on data and other information (both written and oral), such as the plan provisions, provided by City of Dover, Delaware. We have not audited or verified this data and other information. If the underlying data or information is inaccurate or incomplete, the results of our analysis may likewise be inaccurate or incomplete. We performed a limited review of the data used directly in our analysis for reasonableness and consistency and have not found material defects in the data. If there are material defects in the data, it is possible that they would be uncovered by a detailed, systematic review and comparison of the data to search for data values that are questionable or for relationships that are materially inconsistent. Such a review was beyond the scope of our assignment. Variability of Results Future actuarial measurements may differ significantly from the current measurements presented in this valuation due to actual plan experience deviating from the actuarial assumptions, the natural operation of the plan’s actuarial cost method (such as the expiration of an amortization period or additional cost or contribution requirements based on the plan’s funded status), and changes in plan provisions, actuarial assumptions, and applicable law. An assessment of the potential range and cost effect of such differences is beyond the scope of this project. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.

Ms. Donna Mitchell February 17, 2011 Page 3 Certification We hereby certify that, to the best of our knowledge, this report is complete and accurate and all costs and liabilities were determined in conformance with generally accepted actuarial principles and practices based on our understanding of the benefits provided by the City and the requirements of GASB 27, which are consistent with the principles prescribed by the Actuarial Standards Board, the Code of Professional Conduct, and the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States of the American Academy of Actuaries. We further certify that all costs and liabilities have been determined on the basis of actuarial assumptions and methods which are individually reasonable (taking into account the experience of the Plan where available and reasonable expectations); and which, in combination, offer our best estimate of anticipated experience affecting the Plan. GASB 25 and 27 allows employers to select from six actuarial cost methods in determining the Annual Required Contribution. The Entry Age Normal Cost Method with aggregation is used in this valuation. The valuation date is the date that all participant and other pertinent information is collected and liabilities are measured. This date may not be more than 24 months prior to the beginning of the fiscal year. The valuation date for this valuation is July 1, 2010. Furthermore, GASB 25 and 27 requires actuarial valuations to occur at least biennially. Therefore, the results of this valuation may be used for the 2011 fiscal year and be the basis for the 2012 fiscal year, unless significant changes occur that would affect the results of this valuation. Assuming no significant changes, the next valuation would be for the 2013 fiscal year. We are members of the American Academy of Actuaries and meet its qualification standards to render this actuarial opinion. Respectfully submitted, MILLIMAN, INC. By: Tim Nugent, F.S.A. Member American Academy of Actuaries By: Scott F. Porter, F.S.A. Member American Academy of Actuaries GDB:SFP:mlm\078DVR01-11 g:\corr11\dvr\dvrval2010_polpen.doc Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation TABLE OF CONTENTS Page SECTION I - SUMMARY OF RESULTS 1 SECTION II - EXHIBITS 4 SECTION III - CENSUS DATA 12 SECTION IV - SUMMARY OF PRINCIPAL PLAN PROVISIONS 13 SECTION V - ACTUARIAL ASSUMPTIONS AND METHODS 14 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION I – SUMMARY OF RESULTS Executive Summary The Annual Required Contribution (ARC) increased from $0.79 million for the fiscal year ending June 30, 2010 to $1.08 million for the fiscal year ending June 30, 2011 for the Police Pension Plan. The ARC comprises the Normal Cost and an amortization of the Unfunded Accrued Liability plus an interest adjustment. Since there are no active employees participating in the plan, the normal cost is $0. The amortization payment is based on a 14-year (closed) amortization of the unfunded liability. The amortization payment is $1.01 million and the interest adjustment is $0.07 million. The Unfunded Accrued Liability increased from $7.46 million as of July 1, 2009 to $9.47 million as of July 1, 2010. The increase in the ARC and the unfunded liability is primarily due to 1) assumption changes, 2) actuarial losses due to fewer deaths than expected and data changes and 3) City and State contributions less than the ARC offset by 4) actuarial gains on plan assets. The assumptions changes are 1) a decrease in the investment return assumption from 7.5% to 7% and 2) a change in the postretirement mortality table from the 1983 Group Annuity Mortality Table to the RP-2000 Healthy Annuitant Mortality Table with generational projection of mortality improvements. These changes are consistent with the assumptions used in the July 1, 2010 OPEB actuarial valuation. The changes in the actuarial assumptions increased the unfunded liability by $1.9 million and the ARC by $0.23 million. The Annual Pension Cost for the fiscal year ending June 30, 2011 is equal to the ARC plus interest less an amortization on the Net Pension Obligation as of the beginning of the year. The amortization component is known as the Adjustment to the ARC. The Annual Pension Cost for the fiscal year ending June 30, 2011 is $1.13 million. The Net Pension Obligation/ (Asset) is the accumulated difference between the Annual Pension Cost each year and the actual contributions made to the trust by the City and State to fund the plan. The Net Pension Asset as of June 30, 2010 is $1.03 million and is expected to decrease to $0.40 million as of June 30, 2011 based on the expected contributions during the fiscal year. The expected contributions were assumed to equal approximately the same amount as the prior year. The actual Net Pension Obligation will reflect actual contributions made during fiscal year 2011. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 1

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION I – SUMMARY OF RESULTS (Continued) Funding Policy The State contributes to the pension fund on behalf of the City based on 1) an allocation to the City based on a 0.25% surcharge on insurance policies issued in the state and the number of officers employed and 2) 75% of the annual cost of living increase (COLA) granted to police retirees on January 1 each year. For the fiscal year ending June 30, 2010, the State contributed $399,289, but did not remit their contribution for the COLA by June 30, 2010. The ARC is based on an amortization of the unfunded actuarial accrued liability over 30 years beginning July 1, 1994 on a closed basis. For the fiscal year ending June 30, 2011, there are 14 years remaining. The City expects to make a contribution of $95,000 for the fiscal year ending June 30, 2011. Assuming total contributions for the 2011 fiscal year are consistent with the amounts paid for the prior year, the percentage of the ARC paid for the fiscal year ending June 30, 2011 is 46%. Valuation Date The valuation date is the date that all participant and other pertinent information is collected and liabilities are measured. This date may not be more than 24 months prior to the beginning of the fiscal year. The valuation date for this valuation is July 1, 2010 which is at the beginning of the 2011 fiscal year. This is consistent with the prior valuation completed as of July 1, 2009 for the 2010 fiscal years. The results of this valuation may be used for the 2011 fiscal year and be the basis for the 2012 fiscal year, unless significant changes occur that would affect the results of this valuation. Assuming no significant changes, the next valuation would be for the 2013 fiscal year, based on a July 1, 2012 valuation date. Discussion of Supporting Exhibits Exhibit 1 summarizes the assets as of June 30, 2010. Exhibit 2 summarizes the change in assets from the prior year and displays the estimated market value rate of return for the last three years. The estimated rate of return for the fiscal year ending June 30, 2010 was 12.21%, which resulted in an actuarial gain to the plan. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 2

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION I – SUMMARY OF RESULTS (Continued) Exhibit 3 summarizes the actuarial experience for the year ending June 30, 2011. In total, the plan experienced an actuarial loss of $0.04 million. The exhibit also shows the change in the funded ratio from 57.7% as of July 1, 2009 to 52.3% as of July 1, 2010. Exhibit 4 summarized the unfunded actuarial accrued liability by Fund. All liabilities and assets of the Police Plan are allocated to the General Fund. Exhibit 5 summarizes the development of the ARC and the Annual Pension Cost for the fiscal year ending June 30, 2011 by Fund. The Annual Pension Cost is equal to the ARC less an amortization of the Net Pension Obligation. Exhibit 6 summarizes the estimated Net Pension Asset of $0.40 million as of June 30, 2011. The Net Pension Asset shown is based on total contributions made to the plan equal to approximately the amount paid during the prior year. The actual Net Pension Asset will reflect actual contributions made during the fiscal year. Exhibit 7 displays the required supplementary schedules: Schedule of Funding Progress and the Schedule of Employer Contributions. Exhibit 8 summarizes the expected benefit payments from the plan projected over the next 10 fiscal years. Census Data Section III summarizes the census data provided by the City utilized in the preparation of the actuarial valuation. The section shows an age benefit profile of the retirees receiving benefits as of July 1, 2010. Summary of Principal Plan Provisions Section IV summarizes the principal plan provisions as of the valuation date utilized in the preparation of this actuarial valuation. This information was supplied through various correspondences with the City. Actuarial Assumptions and Methods Section V summarizes the actuarial assumptions and methods utilized in the preparation of this actuarial valuation. The liabilities provided in this report are heavily dependent upon the assumptions utilized, especially regarding annual per capita costs and healthcare trend. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 3

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION II – EXHIBITS Market Value of Assets as of June 30, 2010 Assets Cash equivalents $707,910 Mutual Funds 9,679,405 Total $10,387,315 Liabilities Accounts payable (8,713) Total (8,713) Net Assets $10,378,602 Exhibit 1 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 4

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION II – EXHIBITS Change in Market Value of Assets Market Value of Assets as of June 30, 2009 $10,188,899 Income City's contributions 95,000 State contributions and other income 401,587 Investment income 1,154,965 Total 1,651,552 Disbursements Benefit payments (1,446,236) Administrative Expenses (15,613) Total (1,461,849) Net increase/ (decrease) 189,703 Market Value of Assets as of June 30, 2010 $10,378,602 Estimated rate of return 12.21% Estimated Historical Rates of Return Fiscal Year Ending Market Value June 30, 2010 12.21% June 30, 2009 -13.21% June 30, 2008 -5.62% 3 - Year Average -2.77% Exhibit 2 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 5

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION II – EXHIBITS Actuarial Experience for Year Ending June 30, 2010 Actuarial Accrued Liability BOY $17,651,507 Market Value of Assets BOY 10,188,899 Unfunded Accrued Liability BOY 7,462,608 Funded Ratio BOY 57.7% Gross Normal Cost BOY - Interest 559,696 Contributions Made (496,587) Increases in UAL due to: Plan Changes - Assumption Changes 1,902,893 Method Changes - Total 1,902,893 Expected UAL 9,428,610 Actuarial Accrued Liability EOY $19,849,553 Market Value of Assets EOY 10,378,602 Unfunded Accrued Liability EOY 9,470,951 Funded Ratio EOY 52.3% (Gain)/Loss 42,341 Exhibit 3 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 6

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION II – EXHIBITS Unfunded Actuarial Accrued Liability as of July 1, 2010 (110) (412) (480) General Water Electric Fund Fund Fund Total Actives $0 $0 $0 $0 Deferred Vesteds - - - - Retirees 19,849,553 - - 19,849,553 Total Actuarial Accrued Liability 19,849,553 - - 19,849,553 Market Value of Assets 10,378,602 - - 10,378,602 Unfunded Actuarial Liability 9,470,951 - - 9,470,951 Funded Ratio 52.3% N/A N/A 52.3% Exhibit 4 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 7

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION II – EXHIBITS Annual Required Contribution For Fiscal Year Ending June 30, 2011 (110) (412) (480) General Water Electric Fund Fund Fund Total Actuarial Accrued Liability $19,849,553 $0 $0 $19,849,553 Market Value of Assets 10,378,602 - - 10,378,602 Unfunded Liability 9,470,951 - - 9,470,951 Normal Cost $0 $0 $0 $0 Amortization Payment 1,012,108 - - 1,012,108 Interest at 7.00% 70,848 - - 70,848 Annual Required Contribution 1,082,956 - - 1,082,956 Annual Pension Cost For Fiscal Year Ending June 30, 2011 Net Pension Obligation/(Asset) BOY ($1,030,844) $0 $0 -$1,030,844 Annual Required Contribution 1,082,956 - - 1,082,956 Interest on Net Pension Obligation (72,159) - - (72,159) Adjustment to ARC 117,872 - - 117,872 Annual Pension Cost 1,128,669 - - 1,128,669 The ARC is based on a discount rate of 7% and a 14-year amortization (closed) of the unfunded liability. Exhibit 5 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 8

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION II – EXHIBITS Estimated Pension Obligation as of June 30, 2011 (110) (412) (480) General Water Electric Fund Fund Fund Total Net Pension Obligation BOY ($1,030,844) $0 $0 ($1,030,844) Annual Pension Cost 1,128,669 - - 1,128,669 Estimated Contributions 500,000 - - 500,000 Expense Difference 628,669 - - 628,669 Estimated Net Pension Obligation EOY (402,175) - - (402,175) The estimated Net Pension Obligation as of June 30, 2011 assumes contributions will equal approximately the same amount as the prior year. Exhibit 6 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 9

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION II – EXHIBITS Schedule of Funding Progress Actuaral Actuarial Unfunded UAL as a % Valuation Value of Accrued Accrued Funded Covered of Covered Date Assets Liability Liability Ratio Payroll Payroll 7/1/2010 $10,378,602 $19,849,553 $9,470,951 52.3% $0 N/A 7/1/2009 10,188,899 17,651,507 7,462,608 57.7% 0 N/A 7/1/2008 12,500,717 17,615,785 5,115,068 71.0% 0 N/A 7/1/2007 13,950,322 17,589,169 3,638,847 79.3% 0 N/A 7/1/2006 12,471,057 17,532,104 5,061,047 71.1% 0 N/A 7/1/2005 11,944,213 17,850,795 5,906,582 66.9% 65,745 8984.1% Schedule of Employer Contributions Annual Fiscal Pension Percentage NPO (Asset) Year End Cost Contributed EOY 6/30/2011 * $1,128,669 44.3% ($402,175) 6/30/2010 877,820 56.6% (1,030,844) 6/30/2009 552,319 131.4% (1,362,077) Annual Fiscal Required Percentage Year End Contribution Contributed 6/30/2011 * $1,082,956 46.2% 6/30/2010 786,436 63.1% 6/30/2009 520,505 139.4% 6/30/2008 358,807 201.0% 6/30/2007 485,055 154.0% 6/30/2006 560,638 128.0% * Contributions for fiscal year 2011 are assumed to equal approximately the same amount as the prior year. Exhibit 7 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 10

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION II – EXHIBITS Expected Benefit Payments by Fiscal Year Fiscal Year Amount 2011 $ 1,451,000 2012 1,468,000 2013 1,485,000 2014 1,500,000 2015 1,515,000 2016 1,527,000 2017 1,539,000 2018 1,548,000 2019 1,556,000 2020 1,561,000 Exhibit 8 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 11

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION III – CENSUS DATA Summary of Census Data as of July 1, 2010 Participants in Pay Status Number of Monthly Age Participants Benefit Amount < 55 5 $14,276 55 - 59 11 34,514 60 - 64 13 33,459 65 - 69 6 16,110 70 - 74 7 14,120 75 - 79 3 6,013 80 - 84 1 2,824 85 - 89 0 0 90 & Up 0 0 Total 46 $121,316 Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 12

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION IV – SUMMARY OF PRINCIPAL PLAN PROVISIONS as of JULY 1, 2010 As of the date of this valuation, there are no active members in the plan. The following summary is geared to provisions impacting retired members. 1) Type of Plan: The Plan is a contributory, defined benefit plan for policemen hired prior to September 1, 1982. 2) Definitions: a) Average Earnings: Average of the last three years of earnings prior to termination of employment. b) Eligible Survivor: The member’s spouse of at least one year and not domiciled apart at the date of death or surviving children under the age of 18. 3) Retirement Benefits a) Unreduced Retirement Eligibility: Completion of 20 years of service. Benefit: 2 ½% of Average Earnings times Service, but no more than 62 ½% of average earnings. Increase: The retirement benefit is increased 2% per annum every January 1 on a compound basis. b) Death Benefits: Eligibility: Currently retired. Benefit: 50% of the benefit the member was receiving. Benefit is payable immediately to an Eligible Survivor and ceases upon the earliest of death, remarriage or attainment of age 18 for children. Increase: The survivor benefit is increased 2% per annum every January 1 on a compound basis. 4) Changes in Plan Provisions: There have been no changes since the prior valuation. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 13

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION V - SUMMARY OF ACTUARIAL ASSUMPTIONS AND METHODS A. Actuarial Assumptions Interest Rate: 7% per annum, compounded annually. Future Increases on IRS Limits on Benefits: 2.75% Mortality: Healthy Lives: RP-2000 Healthy Annuitant Mortality Table projected on a generational basis using Scale AA. Rates vary by age and gender. B. Actuarial Cost Method The Entry Age Normal Method was used for determining the actuarial accrued liability. Under this method, a projected benefit is determined at each active participant’s assumed retirement age assuming future compensation increases. The plan’s accrued liability is the sum of (a) the accumulation of each active participant’s normal costs attributable to all prior years of service plus (b) the present value of each inactive participant’s future benefits. Aggregation is used in determining the plan’s normal cost. Under this method, the plan’s normal cost is determined by first calculating the present value of future normal costs as the excess of the present value of benefits over the sum of the unfunded liability, the actuarial value of assets, and the present value of any future employee contributions. A normal cost accrual rate is then determined as the present value of future normal costs divided by the sum of the present value of each active participant’s future compensation. The plan’s normal cost is finally determined by multiplying the total compensation of active participants under the assumed retirement age by the normal cost accrual rate. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 14

CITY OF DOVER, DELAWARE Police Pension Plan Actuarial Valuation SECTION V - SUMMARY OF ACTUARIAL ASSUMPTIONS AND METHODS (Continued) C. Asset Valuation Method The actuarial value of assets is equal to the market value of assets. D. Changes in Actuarial Assumptions or Methods • The interest rate was decreased 50 basis points from 7.5% to 7.0%. • The mortality assumption was modified to be consistent with the assumptions used in the July 1, 2010 OPEB valuation. Milliman’s work product was prepared solely for the City of Dover, Delaware for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 15

ACTION FORM PROCEEDING: Legislative, Finance & Administrative Committee AGENDA: 03/14/11 DEPARTMENT OF ORIGIN: Finance DATE SUBMITTED: 03/14/11 PREPARED BY: Donna Mitchell, Controller/Treasurer SUBJECT: Investment Management & Advisory Services – RFP#11-0027FN APPROVALS: City Council EXHIBITS: Exhibits 1 – 4; Evaluation Forms – Titles included on each Exhibit EXPENDITURE REQUIRED: Est. $37,000 based on $40 million portfolio AMOUNT BUDGETED: N/A FUNDING SOURCE: Interest Earnings are reported net of fees TIMETABLE: Upon transfer of Assets from Wilmington Trust to Custodian selected in RFP#11-0028FN RECOMMENDED ACTION: Staff recommends awarding the Investment Management Services contract to PFM Asset Management for a three (3) year period to start the date of contract. The contract may be renewed or extended for two (2) additional two (2) year periods by mutual consent and approved by City Council. Background The City solicited its original request for proposals for Investment Management Services in 2001. The contract was awarded to Wilmington Trust on January 14, 2002 with a one year review and renewal if results were favorable. At that time, there was no provision for a contract end date. Given the recent events in the financial markets and changes in recommended practices of the Government Finance Officers Association (GFOA) and the Internal Auditors Association staff decided it was time to rebid this service. While we have outlined the process followed and attached Exhibits of the forms completed for the fee calculations, scoring, and evaluations to demonstrate the diligence we felt necessary to assure the City’s assets are well managed and protected, we are first providing you with the reasons for our recommendation. After which, you will see the process that went into this recommendation. Recommended Provider Staff narrowed the list down to three providers that could provide the required level of service and were priced competitively. The three firms are Cutwater Asset Management, High Mark Capital Management, and PFM Asset Management. The three selected were most responsive lowest cost providers. The proposals were almost equally matched, with the exception of the PFM Asset Management proposal going above the requirements of the RFP. We scheduled an interview with the three finalists to determine which firm would be the best fit for the City. We provided, in advance, the items we wanted to discuss during the interview. Upon completion of the interviews we contacted several of the client references provided in each firms’ proposal. All responses were highly complementary. One very important point discussed was their past returns for principle return and income (interest) return. One aspect of fixed income investments is the appreciation on the principle, so when you sell the security you get back more than you paid for it. If the value of the security goes down, you take a loss on the principle which is netted against the income (interest) return and could result in a negative overall return. The City’s past three year overall return has been reduced due to negative principle returns. This has been a problem for all fixed income portfolios due to the low interest rate environment, however we wanted to understand how each of these firms had managed to balance risk and return for their clients.

Legislative, Finance, & Administrative Committee Meeting 3/14/2011 Page 2 of 6 PFM provided the best responses to our interview. PFM also provided in their original submission recommended changes to our investment policy to better manage the risk and loss of principle. PFM provided in their proposal a secure password to login to their Asset Management System and review sample reports and account activities. Cutwater and Highmark Capital were also rated as good quality firms and provided one of the same investment policy changes for the City during their interview. However, PFM Asset Management’s overall performance, analytical qualities, and responsiveness bring us to our recommendation of this firm. Performance Results City of Dover Investment Manager RFP #11-0027FN Comparison of Fees & Performance Benchmark to Proposals and City Experience B of A/ML 1 - 3 Yr City Trsry Index Cutwater High Mark PFM Performance 1 year 2.53% 2.38% 2.29% 2.94% 1.70% 3 years 4.08% 4.25% 3.42% 4.83% 3.45% 5 years 4.35% 4.54% 4.01% 4.86% 4.13% 10 years 4.21% 4.80% 4.43% 4.66% 3.41% * * Since inception Fees $37,000 $37,000 $37,000 RFP Process RFP #11- 0027FN was issued on October 21, 2010 for sealed proposals to be received November 30, 2010. Twenty-five proposals were received. The proposal is for a three (3) year period to start the date of contract and may be renewed or extended for two (2) additional (2) year periods by mutual consent. While all proposals appeared to have experienced knowledgeable staff, the quality or content of a couple of the proposals did not measure up to the standards set by all other proposals. However, we kept them in the evaluation process to insure we were not missing out on a qualified low cost provider. Staff followed the process below in evaluating and scoring the proposals.  In January we let the proposing firms know that we would need an additional 30 days to review the proposals due to the high number of proposals received.  We reviewed all proposals and narrowed the number down to nine based on qualifications, technology, experience of the firm, staff, and fees. Fees, technology, and reporting were a strong determinant in this selection since most all of the submissions had good experience and qualified staff.  We performed another review and scored each of the nine proposals. Of those nine we selected the top three firms to interview since they were all in the 90+ percentile. This would enable us to meet with their staff and get a good feel for their knowledge and investment philosophy as well as make sure we didn’t miss anything in what we took from their proposal when doing the scoring. These three were close enough in the scoring from the remainder of the nine that we decided it was prudent to interview the top three.  We also issued custody RFP at the same time and kept the custody process separate from this process. We have let all firms know that the firm would not be awarded both custody and management due to our segregation of these duties for internal control. A couple of firms owned by the same parent company did submit RFP’s for both services.  Responses to any inquiries have gone to all firms, and no firm has been given any additional information that has not been provided to any other firm. When individual requests were received, we denied the request so as not to provide an unfair advantage to any one firm.

Legislative, Finance, & Administrative Committee Meeting 3/14/2011 Page 3 of 6 Exhibit 1 City of Dover Investment Manager RFP #11-0027FN List of Submissions & Fees by Firm Brown Investment Advisory, Inc. Baltimore, MD $92,500 Citizens Private Bank & Trust Plymouth Meeting, PA $85,000 Cutwater Asset Management Armonk, NY $37,000 Cypress Asset Management, Inc. Charlottesville, VA Minority - State of VA $28,000 Cypress Capital Management, LLC Wilmington, DE $60,000 Fort Washington Investment Advisors Cincinnati, OH $140,000 Garcia Hamilton & Associates, L.P. Houston, TX Applying to DE; Hist Underutil Bus - Texas $105,000 Highmark Capital Management New York, NY $37,000 Income Research & Management Boston, MA $105,000 LM Capital Group San Diego, CA Minority - City of San Diego $48,000 Logan Circle Partners, L.P. Philadelphia, PA $60,000 Longfellow Investment Management Boston, MA Women's Business Enterprise $100,000 M.D. Sass New York, NY $152,500 MTB Investment Advisors Baltimore, MD $93,550 PFM Asset Management LLC Princeton, NJ $37,000 PNC Capital Advisors Cleveland, OH $87,500 Ramirez Asset Management New York, NY Minority Supplier Dev Council - DE/PA/NJ $20,000 Rhinebeck Ventures, Inc. Rhinebeck, NY $200,000 Smith Breeden Associates, Inc. Durham, NC $80,000 Smith, Graham, & Co. Houston, TX Houston Minority Business Council $48,000 Stoneridge Investment Partners Malvern, PA $92,500 TD Bank/TD Wealth Management Philadelphia, PA $91,000 Wells Capital Management San Francisco, CA $72,500 Wilmington Trust Company Wilmington, DE $55,000 Xavier Capital Management Largo, MD $112,500 Fees based on a $40 Million portfolio - all based on percentages provided in respective proposals Higher fees = less interest income; Our process strived to balance fees, income, & firm Past five year's fees by Fiscal Year 2010 $64,137 Previous fees included custody and asset 2009 $62,630 management as this was wrapped into a single 2008 $65,218 service. Based on GFOA recommended practices and 2007 $62,247 internal controls we are separating management and 2006 $93,774 custody, therefore issuing two RFPs.

Legislative, Finance, & Administrative Committee Meeting 3/14/2011 Page 4 of 6 Exhibit 2 City of Dover Investment Manager RFP #11-0027FN Summary of Scores, Interview Points, & Reference Questions Investment Manager Overall Score Cutwater Management ………………………………………………… 91.0 Cypress Asset Management …………………………………………… 82.5 High Mark Capital Management ……………………………………… 90.0 LM Capital Group ……………………………………………………… 85.5 Logan Circle Management ……………………………………………… 83.5 PFM Asset Management ………………………………………………… 95.0 Ramirez Asset Management …………………………………………… 80.0 Smith Graham Management …………………………………………… 82.5 Wilmington Trust ……………………………………………………… 84.0 Interview Request and Questions - Top 3 selected firms 1. Key points in your proposal that you believe are beneficial to the City, including risk management. 2. Technology capabilities and the City's ability to electronically monitor account activity periodically. 3. Policy compliance and how you handle non-compliance due to market changes. 4. Provde the City with a breakout of your average returns for principle return and income return. How do you mitigate market losses during downturns and preserve principle? 5. Experience with segregation of custody from investment management. Some discussion on what firms you currently have this relationship with and if you experience difficulty with some custodians more so than others. Reference Check Questions - Top 3 selected firms 1. Have you had any experience with non-compliance of your investment policy. 2. Do you believe the staff assigned to your account is well qualified? Both market analyst and managers. 3. Does the firm communicate timely any non-compliance matters due to market changes or assets held for firms that are downgraded? Do they provide a recommendation for remedying the matter? 4. Would you say your total return meets the policy benchmarks 90+ percent of the time? 5. Does the firm provide technology to access monthly statements and performance reports through the internet? Do you have the ability to monitor account activity? 6. On a scale of 1 to 10 with 10 being the highest how would you rate your overall satisfaction with the firm?

Legislative, Finance, & Administrative Committee Meeting 3/14/2011 Page 5 of 6 Exhibit 3 City of Dover Investment Manager RFP #11-0027FN Summary of Fee Scores - 9 Selected Firms (Lower the fee the higher the assigned points) Firm Score Fees Points Cutwater 3 $37,000 10.0 Cypress Asset Management 2 $28,000 12.5 Highmark 3 $37,000 10.0 LM Cap Group 4 $48,000 7.5 Logan Circle 6 $60,000 2.5 PFM 3 $37,000 10.0 Ramirez 1 $20,000 15.0 Smith Graham 4 $48,000 7.5 Wilmington Trust 5 $55,000 5.0 Point Assignment Calculations 100% 1 15.0 83% 2 12.5 67% 3 10.0 50% 4 7.5 33% 5 5.0 17% 6 2.5

Legislative, Finance, & Administrative Committee Meeting 3/14/2011 Page 6 of 6 Exhibit 4 City of Dover Finance Department Investment Management Advisory Services RFP 11-0027FN Evaluation Scores for Sample Firm Potential Sample Points Firm Understanding of the overall investment program and the investment objectives and its unique constraints 25 Experience, resources, and qualifications of the firms and individuals assigned to this account 20 Experience of the firm in managing state/local government portfolios. In evaluating the firm's experience, past performance data will be evaluated in the context of portfolio objectives and constraints, as well as risk. Reporting - performance, policy benchmarks, and format 20 Recommended approach to management of the portfolio 20 Fees 15 Total Scores 100 0.0 RFP Criteria Date Founded Ownership Headquartered Registered Investment Advisor (Yes/No) Act as broker or as a primary dealer in securities (Yes/No) Registered MWBE (Yes/No) - Delaware or Another State/City Insurance Coverage Errors & Omissions $ Fiduciary's Liability $ Fidelity Bond Coverage $ Number & Types of Accounts as of 9/30/10 # of Accts Assets ($M) Corporate Foundation Healthcare Insurance - Corporate Multi-Employer - Pensions Public Governmental Operating/Bond Proceeds Governmental Pension Funds Grand Total Accounts & Asset Value Composition of Portfolios as of 9/30/10 % AUM ($) Federal Agencies Repurchase Agreements Commercial Paper U.S. Treasuries Corporates Other Certificates of Deposit Total BofA ML US BofA ML Performance Benchmarks Sample Firm Treas 1-3 yrs Govt/Copr 1-3 yrs 1 year 2.53% 3.26% 3 years 4.08% 4.55% 5 years 4.35% 4.64% 10 years 4.21% 4.55% Since inception Reported based on GIPS or AIMR Provide five comparable or most representative governmental clients for references How many accounts have you gained in the last 12 months: How many accounts have you lost in the last 12 months: ADV Included for review & 5 References to contact

ACTION FORM PROCEEDING: Legislative, Finance & Administrative Committee AGENDA: 03/14/11 DEPARTMENT OF ORIGIN: Finance DATE SUBMITTED: 3/14/11 PREPARED BY: Donna Mitchell, Controller/Treasurer SUBJECT: Investment Banking Custody Services – RFP#11-0028FN APPROVALS: City Council EXHIBITS: Exhibit 1 – Scoring of Proposals; Exhibit 2 – Pricing Calculations & Comparisons EXPENDITURE REQUIRED: Est. $10,200 (fees will vary based on the number of security transactions) AMOUNT BUDGETED: N/A FUNDING SOURCE: Interest Earnings are reported net of fees TIMETABLE: Transfer of Assets from Wilmington Trust to Custodian selected upon Council approval RECOMMENDED ACTION: Staff recommends awarding the Investment Custody Services to Union Bank for a three (3) year period to start the date of contract and may be renewed or extended for two (2) additional two (2) year periods by mutual consent and approved by City Council. RFP #11- 0028FN was issued on October 21, 2010 for sealed proposals to be received December 1, 2010. Six proposals were received. The current proposal calls for a three (3) year period to start the date of contract and may be renewed or extended for two (2) additional (2) year periods by mutual consent and approved by City Council. All submissions received were from major financial institutions, of which all are capable of managing the custody of the City’s investment assets. Wells Fargo and Union Bank were the two most competitive banks. Fees were calculated based on fifty security trades each month. The fee difference between Wells Fargo and Union Bank is greater if the trades are less than fifty each month due to the minimum fee requirement by Wells Fargo. Union Banks fees would be less while Wells Fargo would remain at $13,500. The City would need to have sixty-eight trades per month for Union Banks total fees to exceed Wells Fargo’s. The City currently has contracts with Wells Fargo as custodian for our three Trust Funds – General Employee Pension, Police Pension (closed plan), and Other Post Employment Benefits (OPEB). The current annual fees paid on the Trust Funds are as follows: General Employee Pension Plan $7,004.90 Police Pension Plan $4,140.77 OPEB Trust $4,884.00 All three of these accounts are invested in mutual funds and have a minimum amount of security transactions. The investment custody account would experience a greater amount of activity. While we receive excellent services on these accounts by Wells Fargo, the Government Finance Officers Association recommended practice is to diversify assets under custody when possible. Therefore, based on the fees, scores, and the above recommended practice staff’s recommendation is to award the service contract to Union Bank.

Legislative, Finance, & Administrative Committee Meeting 3/14/2011 Page 2 of 3 Exhibit 1 City of Dover Investment Bank Custody Services RFP 11-0028FN Evaluation Scores Potential M&T TD Union Wells Wilmington Points Invest PNC Wealth Bank Fargo Trust Organization & Financials 0 - 25 23.0 24.0 22.0 24.0 24.0 20.0 Experience 0 - 25 25.0 25.0 22.0 25.0 25.0 25.0 Accounting & Reporting of the City's Assets 0 - 30 28.0 30.0 28.0 30.0 30.0 26.0 Cost 0 - 20 11.0 8.0 5.0 20.0 17.0 14.0 Total Scores 100 87.0 87.0 77.0 99.0 96.0 85.0 Comments - T D Wealth has custody through Bank of New York Mellon, they are not handling custody directly so took off points. Union Bank is a California Bank owned by Mitsubishi -UFJ Financial Group (Japan), however financials all look good and technology is great. Wilmington Trust lacks technology and has had some recent financial problems. Has recently merged with M & T Bank.

Legislative, Finance, & Administrative Committee Meeting 3/14/2011 Page 3 of 3 Exhibit 2 City of Dover Investment Custody Services RFP # 11‐0028FN Fee Schedules M&T PNC TD Invest Instit Wealth Union Wells Wilmington Group Invest Mgmt Bank Fargo Trust On Current Market Value Total Portfolio 0.040 0.100 No bps No bps 1st $5M 0.100 Next $10M 0.050 Over $15M 0.025 1st $30M 0.030 Over $30M 0.020 Basis pts on $40M portfolio $ 16,000 $ 16,250 $ 10,000 Admin/Maint. Fee per account $ 300 $ 500 $ 600 Minimum/Base Fee $ 2,500 $ 7,500 $ 3,500 $ 10,000 per sub account $ 600 Accounting & Reporting Separately Managed $ 2,500 Mutual/Commingled $ 1,000 Security Transaction Charges per Transaction $ 10.00 $ 15.00 $ 15.00 $ 10.00 Ineligible $ 40.00 Mutual Fund settlements $ 20.00 Principal payment for securities $ 10.00 Domestic purchases/sales $ 15.00 Foreign purchase/sales $ 50.00 Eurodollar purchase/sales $ 65.00 Wires each $ 15.00 No info $ 10.00 Wires ‐ outgoing $ 25.00 Wires‐ incoming $ 10.00 Affiliated with Investment Mgr. Wilm Trust/MTB PNC Cap TD Wealth Mgt High Mark Wells Cap Wilm Trust BONY Mellon handles custody Account Maint/Base/Reporting Fees $ 300 $ 500 $ 1,200 $ 3,500 $ ‐ Transaction/wire fees $ 6,000 $ 9,000 All in Fee $ 9,000 $ 6,000 $ 9,000 Minimum fee would apply $ 10,000 Total All Fees $ 22,300 $ 25,750 $ 40,000 $ 10,200 $ 13,500 $ 19,000

Office of the Mayor MEMORANDUM TO: Legislative, Finance and Administration Committee FROM: Mayor Carleton E. Carey, Sr. DATE: March 3, 2011 SUBJECT: Review of Hospitality and Civic Function Policy I would like the Legislative, Finance, and Administration Committee to review the Hospitality and Civic Function Policy. I believe there are important functions offered by the Central Delaware Chamber of Commerce and Kent County Tourism that are currently not covered under the policy. I feel the fees for these functions should be covered for Council Members to attend. Please see the list of examples: 1. The Central DE Chamber of Commerce Annual Awards Dinner $50.00 x 9ppl = $450.00 2. The Mayors Annual Prayer Breakfast $20.00 x 9ppl = $180.00 3. The Governors Annual Prayer Breakfast $16.00 x 9ppl = $144.00 4. Kent County Economic Summit $25.00 x 9ppl = $225.00 Total = $999.00 These functions offer a great deal of information for the City of Dover including working relationships that add to our economic benefit.

City of Dover, Delaware DRAFT Capital Investments Plan FY 12 thru FY 16 PROJECTS BY DEPARTMENT Department Project# Priority FY 12 FY 13 FY 14 FY 15 FY 16 Total Central Services Dump Truck Refurbishment CS1200 1 30,000 30,000 City Hall Fire Suppression System CS1201 2 106,000 106,000 212,000 Central Services Conference Room & Offices CS1202 4 10,000 15,000 25,000 Space Needs Study Implementation CS1390 5 50,000 434,890 402,446 4,165,328 5,052,664 Central Services Total 30,000 60,000 555,890 508,446 4,165,328 5,319,664 Customer Services Pay-As-You-Go Water Load Station CU1201 1 30,240 30,240 Customer Notification by E-IVR Automated Dialing CU1390 1 30,000 30,000 Customer Services Total 30,240 30,000 60,240 Information Technology IT Long Range Planning Process Review and Update IT1390 2 65,000 65,000 CISCO VoIP Phone Server Replacement IT1490 1 40,000 40,000 Information Technology Total 65,000 40,000 105,000 Library Replacement Library LB0901 1 11,195,009 2,540,483 13,735,492 Library Total 11,195,009 2,540,483 13,735,492 Mayor Downtown Security Cameras MR1101 1 33,000 33,000 Mayor Total 33,000 33,000 Public Services-Admin GIS Infrastructure and Mobile Solutions PA1290 4 18,000 18,000 18,000 54,000 Public Services-Admin Total 18,000 18,000 18,000 54,000 Public Services-Streets Street and Alley Program ST1101 1 1,350,000 1,300,000 1,300,000 1,300,000 1,300,000 6,550,000 Concrete Construction and Replacement Program ST1102 2 60,000 65,000 70,000 75,000 80,000 350,000 Brine Manufacturing System ST1201 1 27,825 27,825 Salt Storage Facility - Schutte Park ST1203 3 50,000 50,000 Silver Lake Revitalization Project ST1490 4 50,000 250,000 100,000 400,000 Public Services-Streets Total 1,487,825 1,365,000 1,420,000 1,625,000 1,480,000 7,377,825 Thursday, March 03, 2011

Department Project# Priority FY 12 FY 13 FY 14 FY 15 FY 16 Total GRAND TOTAL 12,794,074 4,078,483 2,033,890 2,133,446 5,645,328 26,685,221 Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # CS1200 Project Name Dump Truck Refurbishment Type Maintenance Department Central Services Useful Life 5-10 years Contact Central Services Director Category General Priority 1 New Project: Yes Account Number: 147-1800-554-40-23 Time-Line: Description Total Project Cost: $30,000 The City has three, model year 2001, five ton dump trucks purchased in 2002. These trucks have severaly deteriorated dump bodies. Each truck chassis requires minor repair. The diesel engines reflect less than 35K miles on the odometers. The averages miles drives equals approximately 4,300 per year. These diesal engines should last for 75k miles. The rusted dump bodies will be removed, sandblasted, and the frames will be repainted. New brakes, hydraulic hoses and exhaust systems will be installed. In addition, all belts and hoses will be replaced and new stainless bodies will be installed. Justification The most expensive part of the dump trucks are their engines, chassis' and drive trains. Once repaired, the vehicles could last 10 years or more. At current usage, they will only have approximately 78k miles on the odometers. The replacement costs for 3 new dump trucks is $104,476 each. Having the repairs completed on-site will save the City approximately $283,000 Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total Construction/Maintenance 30,000 30,000 Total 30,000 30,000 Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total General Fund 30,000 30,000 Total 30,000 30,000 Budget Impact/Other Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # CS1201 Project Name City Hall Fire Suppression System Type Improvement Department Central Services Useful Life 20-25 years Contact Central Services Director Category General Priority 2 New Project: Account Number: Time-Line: Description Total Project Cost: $212,000 This project will be divided into two parts. Part one is for the City Hall, single story, Administrative will and will begin in Fiscal 2012. The second part is for the City Hall, two story, Executive wing and will begin in Fiscal 2013. Justification This is a workplace safety requirement mandated by the Fire Marshalls Office. Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total Other 106,000 106,000 212,000 Total 106,000 106,000 212,000 Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total General Fund 106,000 106,000 212,000 Total 106,000 106,000 212,000 Budget Impact/Other Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # CS1202 Project Name Central Services Conference Room & Offices Type Improvement Department Central Services Useful Life 10-15 years Contact Central Services Director Category General Priority 4 New Project: Yes Account Number: 110-2700-571.40-31 Time-Line: Description Total Project Cost: $25,000 This project will be divided into three parts. Part one for design, framing and electrical installation and will begin in Fiscal 2012. Part two for construction and finishing of the offices will begin in Fiscal 2013. Part three for furnishing, carpeting and equipping of the conference room and offices will begin in Fiscal 2014. Justification There is no conference room available within Central Services to conduct bid openings, Pre-bid meetings, contract negotiations or conduct other meetings/training. This conference will be made available to all city offices, especially the Sanitation Department, Street Department and the Water Department. The Central Services Department also needs more space for staffing needs. Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total Construction/Maintenance 10,000 10,000 Equip/Vehicle/Furnishings 15,000 15,000 Total 10,000 15,000 25,000 Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total General Fund 10,000 15,000 25,000 Total 10,000 15,000 25,000 Budget Impact/Other Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # CS1390 Project Name Space Needs Study Implementation Type Improvement Department Central Services Useful Life Unknown Contact Central Services Director Category General Priority 5 New Project: No Account Number: 147-2500-552.40-31 Time-Line: FY10 through FY16 Description Total Project Cost: $13,399,622 This is a ten-year plan for City buildings that will create spaces and places for the City's elected officials and employees to provide quality services to the citizens. The Facility Space Committee toured all City buildings, interviewed all department heads, conducted a needs assessment and proximity matrix, created measured drawings of buildings, and consulted with an architect as needed. We will continue to face all the problems associated with a lack of space, lack of security, poor locations, and substandard space. Justification We will continue to face all the problems associated with a lack of space, lack of security, poor locations, and substandard space. The Space Needs Study revealed (1) a lack of space for public and customers, (2) a lack of working space, (3) poor locations, (4) substandard space, (5) a lack of storage space, and (6) a lack of security. Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total Future Construction/Maintenance 50,000 434,890 402,446 4,165,328 5,052,664 8,346,958 Total 50,000 434,890 402,446 4,165,328 5,052,664 Total Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total Future General Fund 50,000 434,890 402,446 4,165,328 5,052,664 8,346,958 Total 50,000 434,890 402,446 4,165,328 5,052,664 Total Budget Impact/Other Impact on Operating Budget has yet to be determined at this time. Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # CU1201 Project Name Pay-As-You-Go Water Load Station Type Improvement Department Customer Services Useful Life 15-20 years Contact Customer Service Manager Category General Priority 1 New Project: Account Number: Time-Line: Description Total Project Cost: $30,240 The City of Dover provides local contractors the ability to fill water trucks from a water dispensing connection, located at the William Street warehouse. The connection is not in a secure area and operates on the honor system. Contractors are required to purchase a water ticket from the Customer Service Department. However, there are contractors that circumvent the process and fill the water trucks without purchasing a ticket. The water tickets are sold to contractors for $5.00, per truck fill. The capacities of the trucks vary with the amount of the ticket remaining at $5.00. Consumption is monitored by obtaining a meter reading each month and charging a designated department for the usage. When the amount of tickets purchased is compared to the metered consumption there is a loss of revenue. Justification This project will prevent direct access to the City of Dover water supply from the warehouse and allow the City to collect revenue for water usage. The $5.00 charge is obsolete; contractors should pay fairly for water based on truck size and gallons consumed. The new system, the Mini General, is an economical solution for low volume bulk water dispensing applications.After the customer pre-pays for water, they will be given a temporary access number and pin number. The system will only dispense the amount of water that is paid for in advance. Each transaction is date and time stamped and recorded by Water+ software. City departments may also obtain water from this location. Each department will be required to follow the same process. Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total Equip/Vehicle/Furnishings 30,240 30,240 Total 30,240 30,240 Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total Water/Wastewater Fund 30,240 30,240 Total 30,240 30,240 Budget Impact/Other Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # CU1390 Project Name Customer Notification by E-IVR Automated Dialing Type Improvement Department Customer Services Useful Life 5-10 years Contact Customer Service Manager Category General Priority 1 New Project: Account Number: Time-Line: Description Total Project Cost: $30,000 One of the most popular and cost effective uses of IVR Technology involves automating the out-dialing process Another use is to add the feature of customer alerts and notifications. This automation can take a variety of forms and functionality. E-IVR automated features include the ability to broadcasting a huge number of calls to deliver a pre-recorded message or alert, targeting a specific list to be called to relay individualized information, and to automate the dialing process as an efficient and management tool for staff. It is critical to maximize the use of communication resources, advance with technology and offer features similar to local utilities and municipalities. Our existing phone system provides the foundation to add beneficial enhancements. Justification The E-IVR notification system gets the word out fast for emergency notification, road closures, power outages, alerts customer of electric and water disconnections that are scheduled due to nonpayment of utility account, upcoming events. The Customer Service department is submitting the request for consideration. This system should benefit City departments and Officials city wide. The phone system broadcasts from our data base, when answered the IVR plays a prerecorded message. Unsuccessful calls are noted and can be broadcast again. The benefit to the customer is to receive critical notifications and become better informed. Since the calls are automated staff, may be utilized in other functions. Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total Other 30,000 30,000 Total 30,000 30,000 Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total General Fund 30,000 30,000 Total 30,000 30,000 Budget Impact/Other Estimated annual maintenance fees. This type of notification system is already used by other utilities and municipalities in Delaware. In conjunction with electric disconnects for nonpayment, the customer would receive an automated call two days prior to the scheduled disconnection date. This serves as a reminder to remit the payment and allows the customer to prepare for the interruption of service in the event payment is not received. A customer may chose to expedite payment by using the recently implemented credit card online processing system. Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # IT1390 Project Name IT Long Range Planning Process Review and Update Type Improvement Department Information Technology Useful Life Unknown Contact IT Director Category General Priority 2 New Project: No Account Number: Time-Line: Begin Fiscal 2011 Description Total Project Cost: $65,000 In 2004, the City hired a third party to help us put a framework around long-range technology planning and spending. The outcome which included a five-year plan has provided a road map and format that has allowed us to continue to move forward with technology in an organized and predictable manner. This new project is to repeat the process and update our plan. This update was presented to the TAC group and received a high number of votes October 2008. Justification This has been effective, the five-year plan was exhausted in fiscal year 2009 and has begun again in Fiscal 2011. Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total Other 65,000 65,000 Total 65,000 65,000 Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total General Fund 65,000 65,000 Total 65,000 65,000 Budget Impact/Other Estimate is based on cost of 2004 study. Lowest bid back then was $50,000. Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # IT1490 Project Name CISCO VoIP Phone Server Replacement Type Equipment Department Information Technology Useful Life 5-10 years Contact IT Director Category General Priority 1 New Project: Account Number: Time-Line: Description Total Project Cost: $40,000 In 2006, the CISCO VoIP telephone system was installed. The three Call Manager servers that operate the system and the Call Center server used by Customer Service will reach the end of its life cycle. After consulting with CISCO and their local service provider, MTM, it is anticipated that the existing equipment could continue to operate for another two years, until Fiscal 2014. Justification After Fiscal 2014, it is likely that the servers would no longer be able to be covered by a service contract. Additionally, ther servers would not support any software upgrades. Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total Equip/Vehicle/Furnishings 40,000 40,000 Total 40,000 40,000 Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total General Fund 40,000 40,000 Total 40,000 40,000 Budget Impact/Other Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # LB0901 Project Name Replacement Library Type Improvement Department Library Useful Life 25+ years Contact Library Director Category General Priority 1 New Project: No Account Number: Time-Line: Description Total Project Cost: $20,314,917 The Dover Public Library, built in 1961, can no longer meet the needs of the current population of the greater Dover service area. A new 46,000 square foot library facility will be built on Loockerman Street between City Hall and the Dover Post Office in downtown Dover. The consequences of delaying or eliminating this project are that members of the community will continue to receive very limited library services due to space and other deficiencies in the current facility. State funding, already committed, will be lost if the project is delayed. This project is related to the Delaware Division of Libraries’ Statewide Master Plan. Justification In 2004, library facilities planners, Robert H. Rohlf Associates conducted a library facilities plan and recommended that the City of Dover build a 39,000-50,000 square foot library in the downtown area because the current library is insufficient to meet the needs of citizens. The study concluded that the current library does not provide enough parking, shelving, programming areas, quiet study rooms, sufficient office space; and that there are ADA issues throughout the building. The study compared the Dover Public Library to libraries in similar-sized communities and services are lacking in many areas, including collection and reference. The benefit of replacing the current library is that the community will have access to a library with sufficient space for collections and computers, lighting, parking, quiet study areas, and programming space. Prior Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total 6,579,425 Planning/Design 143,156 15,789 158,945 Construction/Maintenance 9,130,209 2,282,533 11,412,742 Total Other 1,921,644 242,161 2,163,805 Total 11,195,009 2,540,483 13,735,492 Prior Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total 6,579,425 Library Reserve Fund 1,200,938 78,000 1,278,938 Other 4,396,566 700,344 5,096,910 Total State Grant 5,597,505 1,762,139 7,359,644 Total 11,195,009 2,540,483 13,735,492 Budget Impact/Other A larger library will require more maintenance, increased operational funding for heating and cooling, increased janitorial services, and at least 2.5 additional full-time library staff. Budget Items FY 12 FY 13 FY 14 FY 15 FY 16 Total Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Budget Items FY 12 FY 13 FY 14 FY 15 FY 16 Total Other (Insurance, Utilities) 169,579 174,666 344,245 Total 169,579 174,666 344,245 Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # MR1101 Project Name Downtown Security Cameras Type Equipment Department Mayor Useful Life 5-10 years Contact Mayor Carey Category General Priority 1 New Project: No Account Number: 147-3200-519-40-25 Time-Line: Description Total Project Cost: $64,500 Installing surveillance cameras, one on Loockerman and State Street, one on State and North Street at the Schwartz center and South Bradford Street on the Minor Street Alley. These are areas that have had the most complaints from, so the first three should be installed in these locations. Eventually we can cover the Business District either by adding so many per year of if a grant should become available, adding more. 2nd Phase add Governor’s Avenue Parking Lot. Justification Reduction in crime in the specified areas. These Cameras would cooperate off the current fiber optic System, so there would be no telephone line charges. Monitors would be at the police station with dispatchers being able to monitor the locations for illegal actions in the area and to solve crimes that have occurred Prior Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total 31,500 Other 33,000 33,000 Total Total 33,000 33,000 Prior Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total 31,500 General Fund 33,000 33,000 Total Total 33,000 33,000 Budget Impact/Other Phase I completed with Grant Funds, this portion of the project includes Phase II (63,000) and Expansion (63,000). Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # PA1290 Project Name GIS Infrastructure and Mobile Solutions Type Equipment Department Public Services-Admin Useful Life 3-5 years Contact Public Services Director Category General Priority 4 New Project: No Account Number: Time-Line: Description Total Project Cost: $54,000 This project will be used to expand mobile data terminals (MDT's) to building inspectors and the Public Works inspector. The ability will be given to access all networked files and programs (HTE, Fortis, Outlook, etc.) along with utilization of many GIS capabilities. The Fire Marshal's office along with Code Enforcememt staff have this capability and it has been beneficial for both departments. Justification This strategy would procure hardware and software as well as perform pilot projects that would test the ability of the City to expand in such areas of technology. The types of hardware to be purchased are GPS receivers, patch antennas, laptops, vehicle mounts, and lightweight clients. Software would be extensions used in conjunction with ESRI’s ArcGIS software to perform specific tasks. Types of extensions are spatial analyst, network analyst, etc. ESRI Services may be purchased for help with advancement in the City’s use of ArcGIS Server Mobile. Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total Other 8,000 8,000 8,000 24,000 Miscellaneous 10,000 10,000 10,000 30,000 Total 18,000 18,000 18,000 54,000 Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total General Fund 18,000 18,000 18,000 54,000 Total 18,000 18,000 18,000 54,000 Budget Impact/Other As pilot projects are preformed and found to be successful, budgets will grow as the pilots are implemented department or City-wide. Future software maintenance and hardware replacement (sustainability). The City is using two NASCAR races a year to implement new technologies. Along with training employees in these technologies, we are utilizing techniques used in damage assessment and emergency recovery during daily race weekend operations. To continue expanding on such pilot projects, we would need additional hardware and software. Other below represents ESRI services and support. Miscellaneous below represents mostly hardware and some software. Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # ST1101 Project Name Street and Alley Program Type Improvement Department Public Services-Streets Useful Life 20-25 years Contact Public Services Director Category General Priority 1 New Project: Account Number: Time-Line: Description Total Project Cost: $9,200,000 This project will rehabilitate approximately three to five percent (3-5%) of the street and alley network each year. The estimated capital maintenance costs are $33.7 million over a 20-year planning horizon in Fiscal Year 2005 dollars. This estimate is based on the needs survey conducted by Public Services in Fiscal year 2004. Continuous maintenance on these assets will prevent more costly reconstruction in the future. This project combines the former Street Resurfacing Program, the Alley Program and the Barrier Free Access Ramp Program Justification The program identifies maintenance costs for 84.79 miles of streets and 15.24 miles of alleys as of June 30, 2010. Replacement of deteriorated curbs, gutters, and sidewalks provides improved use, drainage, and the appearance of the pavement section. The Street and Alley Program schedule is driven by funding and road ratings. Total street mileage is growing each as more roads and alleys are dedicated for public maintenance due to growth. Prior Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total 2,650,000 Construction/Maintenance 1,350,000 1,300,000 1,300,000 1,300,000 1,300,000 6,550,000 Total Total 1,350,000 1,300,000 1,300,000 1,300,000 1,300,000 6,550,000 Prior Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total 2,650,000 Community Transportation Fun 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 5,000,000 General Fund 350,000 300,000 300,000 300,000 300,000 1,550,000 Total Total 1,350,000 1,300,000 1,300,000 1,300,000 1,300,000 6,550,000 Budget Impact/Other The improvement schedule is based on the Fiscal Year 2004 ratings and Community Transportation Funds committed by area legislators. The annual funding split is proposed to be $700,000 from the General Fund and $1,000,000 from Community Transportation Funds in Fiscal year 2012. Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # ST1102 Project Name Concrete Construction and Replacement Program Type Maintenance Department Public Services-Streets Useful Life 30+ years Contact Public Services Director Category General Priority 2 New Project: No Account Number: Time-Line: Continuous Description Total Project Cost: $400,000 This program replaces and rehabilitates deteriorated sidewalks and curbs throughout the City using in-house labor and private contractors. This is in accordance with the ADA. Delaying or eliminating the project will result in continued complaints and insurance claims from citizens and visitors. In addition, further deterioration of the sidewalk network will occur. Justification This program promotes the interconnection of the sidewalk network to conform to ISTEA (Intermodal Surface Transportation Efficiency Act) and rehabilitates sidewalks that have root damage from City street trees. This program also facilitates compliance with the Americans with Disabilities Act as it relates to the pedestrian network as well as improving localized drainage issues. Prior Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total 50,000 Construction/Maintenance 60,000 65,000 70,000 75,000 80,000 350,000 Total Total 60,000 65,000 70,000 75,000 80,000 350,000 Prior Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total 50,000 General Fund 60,000 65,000 70,000 75,000 80,000 350,000 Total Total 60,000 65,000 70,000 75,000 80,000 350,000 Budget Impact/Other There is no impact on the operating budget as reduction in insurance claims and improved pedestrian mobility is difficult to financially quantify. The Department of Public Services maintains a prioritization list that outlines the categories of replacement. Complaints are entered on the list as they are received and prioritized by City staff. Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # ST1201 Project Name Brine Manufacturing System Type Equipment Department Public Services-Streets Useful Life 10-15 years Contact Public Services Director Category General Priority 1 New Project: Account Number: Time-Line: Description Total Project Cost: $27,825 The ABS-1500 automatic batch system is designed for the manufacturing of a brine solution continuously. The brine solution is produced from a mixture of granular salt and standard tap water. The system can produce up to 4,000 gal of brine per hour. The ABS-1500 - $11,550; a 5,000 gallon heavy duty storage tank - $3,675 and the Single lane EZ load applicator system - $12,600 Justification Waiting to receive updated information from Scott Koenig. (hf 2/23/2011) Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total Equip/Vehicle/Furnishings 27,825 27,825 Total 27,825 27,825 Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total General Fund 27,825 27,825 Total 27,825 27,825 Budget Impact/Other Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # ST1203 Project Name Salt Storage Facility - Schutte Park Type Equipment Department Public Services-Streets Useful Life 20-25 years Contact Public Services Director Category General Priority 3 New Project: Yes Account Number: Time-Line: Description Total Project Cost: $50,000 This project proposes the construction of a 50’ long x 50’ wide x 20’ high salt storage building at the rear of Schutte Park. The proposed construction will allow city staff to store salt indoors, greatly reducing the environmental impact of this operation. Salt is only used during winter months; however, we typically have this material on hand in varying quantities all year long. Justification Salt is currently stored down at Old PW II under a tarp within the concrete area. The current method of covering this material is inadequate and has potential environmental impacts on the St. Jones River. All runoff from this storage area goes directly into the St. Jones River. This project will likely be a requirement in our NPDES MS4 permit renewal scheduled for July 1, 2011. Moving this material indoors and under roof will reduce the environmental impact and allow this resource to be used in a more efficient manner. Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total Construction/Maintenance 50,000 50,000 Total 50,000 50,000 Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total General Fund 50,000 50,000 Total 50,000 50,000 Budget Impact/Other Thursday, March 03, 2011

DRAFT Capital Investments Plan FY 12 thru FY 16 City of Dover, Delaware Project # ST1490 Project Name Silver Lake Revitalization Project Type Improvement Department Public Services-Streets Useful Life 20-25 years Contact Public Services Director Category General Priority 4 New Project: Yes Account Number: Time-Line: Description Total Project Cost: $600,000 The proposed project will remove all of the old pavement and parking areas and construct a new central parking lot and access to the boat ramp area as well as access from Kings Highway. The existing pavement condition is in poor quality, and the parking pods create a public perception problem. This project will plant trees, flowers, and shrubs below the dam on Silver Lake to Court Street along the St. Jones River in order to improve water quality and protect the stream bank. This will be a multi-year project. The department continues to receive complaints regarding the parking pods, the further deterioration of the existing pavement sections and parking areas, lack of stormwater management practices, bank erosion related to stormwater runoff and, poor site lighting. Justification Currently there are no stormwater management practices being implemented on this site, and the location adjacent to the St. Jones River causes direct stormwater discharge to an environmentally sensitive area. The proposed reconstruction and relocation of the loaded parking lot will allow for best management practices regarding stormwater management to be implemented at this site. Expenditures FY 12 FY 13 FY 14 FY 15 FY 16 Total Future Planning/Design 50,000 50,000 200,000 Construction/Maintenance 250,000 250,000 Total Miscellaneous 100,000 100,000 Total 50,000 250,000 100,000 400,000 Funding Sources FY 12 FY 13 FY 14 FY 15 FY 16 Total Future Community Transportation Fun 250,000 250,000 200,000 General Fund 50,000 50,000 100,000 Total State Grant 50,000 50,000 Total 50,000 250,000 100,000 400,000 Budget Impact/Other The proposed project includes parking reconstruction, planning and design, and ultimately landscaping for this section of the St. Jones River. Thursday, March 03, 2011

City of Dover, Delaware DRAFT Capital Investments Plan FY 12 thru FY 16 VEHICLE/EQUIPMENT REPLACEMENTS PROJECTS BY DEPARTMENT Department Project# Priority FY 12 FY 13 FY 14 FY 15 FY 16 Total Central Services 1987 Forklift 12Veh#NEW 3 30,670 30,670 Central Services Total 30,670 30,670 Facilities Management 1996 Dodge B2500 (438) 13Veh# 438 n/a 16,096 16,096 1996 Ford E350 (436) 14Veh# 436 n/a 16,096 16,096 1999 Dodge RMV Van (435) 15Veh# 435 n/a 16,096 16,096 Facilities Management Total 16,096 16,096 16,096 48,288 Mayor 1999 Ford Taurus 11Veh# 2 n/a 20,323 20,323 Mayor Total 20,323 20,323 Public Services-Admin 1999 Ford Explorer (6) 11Veh# 6 n/a 28,818 28,818 Public Services-Admin Total 28,818 28,818 Public Services-Grounds 1995 Ford Crew Cab Dump Truck (552) 12Veh# 552 5 44,720 44,720 2002 Toro Wing Mower (562) 12Veh# 562 2 57,500 57,500 2002 Dodge Pick Up (550) 13Veh# 550 3 17,000 17,000 2001 Dodge Pick Up (553) 13Veh# 553 2 17,000 17,000 1999 Dodge Pick Up (558) 13Veh# 558 2 17,000 17,000 1999 Chevy Dump Truck (554) 14Veh# 554 3 54,491 54,491 1998 Vermeer Stump Grinder (566) 14Veh# 566 3 44,000 44,000 1998 X-Mark Mower (568) 14Veh# 568 3 14,310 14,310 2001 Kubota Tractor (569) 14Veh# 569 3 29,116 29,116 1998 Chevy Crew Cab Dump Truck (551) 15Veh# 551 4 58,962 58,962 2006 X-Mark Mower (573) 15Veh# 573 4 15,456 15,456 1991 International Utility Trailer (578) 15Veh# 578 4 14,000 14,000 2002 Bean 300 Gallon Sprayer (585) 15Veh# 585 4 22,122 22,122 1990 FMC 300 Gallon Sprayer (565) 16Veh# 565 5 23,760 23,760 1999 Bandit Chipper (579) 16Veh# 579 5 46,122 46,122 1994 Vermeer Chipper (588) 16Veh# 588 5 46,000 46,000 Public Services-Grounds Total 102,220 51,000 141,917 110,540 115,882 521,559 Public Services-Inspections 2001 Dodge Pick Up Truck (20) 12Veh# 20 1 16,500 16,500 2001 Dodge Pick Up (19) 13Veh# 19 2 16,000 16,000 Wednesday, March 02, 2011

Department Project# Priority FY 12 FY 13 FY 14 FY 15 FY 16 Total 2002 Dodge Pick Up (18) 14Veh# 18 3 16,000 16,000 2001 Dodge Pick Up (22) 14Veh# 22 3 16,000 16,000 Public Services-Inspections Total 16,500 16,000 32,000 64,500 Public Services-Life Safety 20' Express Wagon with Honda Generator 12Veh# 14 1 17,500 17,500 Public Services-Life Safety Total 17,500 17,500 Public Services-Planning 2009 Chevy Uplander 13Veh# 3 n/a 16,177 16,177 Public Services-Planning Total 16,177 16,177 Public Services-Sanitation 2004 Peterbilt Automated Trash Truck (442) 12Veh# 442 2 232,084 232,084 2003 Sterling Bulk Truck (447) 12Veh# 447 2 136,500 136,500 2004 Peterbilt Automated Trash Truck (443) 13Veh# 443 2 253,875 253,875 2002 Int'l Rear Loader (449) 13Veh# 449 2 129,375 129,375 2003 Peterbilt 320 Automated Trash Truck (450) 13Veh# 450 1 246,075 246,075 2008 Peterbilt Automated Trash Truck (441) 14Veh# 441 3 296,075 296,075 2002 Hurst Trailer (453) 14Veh# 453 3 14,500 14,500 2008 Intn't Rear Loader (445) 15Veh# 445 4 165,975 165,975 2008 Peterbilt Side Loader (451) 15Veh# 451 4 296,075 296,075 Public Services-Sanitation Total 232,084 765,825 310,575 462,050 1,770,534 Public Services-Streets 1992 International Dumpt Truck (328) 12Veh# 328 1 131,055 131,055 2002 Tymco Street Sweeper (357) 12Veh# 357 1 170,028 170,028 1986 Case Backhoe (319) 13Veh# 319 2 94,075 94,075 2001 Int'l Dump Truck (322) 13Veh# 322 2 123,275 123,275 2001 Int'l Dump Truck (324) 13Veh# 324 2 133,074 133,074 1999 Dodge Pick Up Truck (330) 13Veh# 330 2 19,500 19,500 2001 Dodge Pick Up Truck (331) 13Veh# 331 2 19,500 19,500 1992 Int'l Leaf Truck (366) 13Veh# 366 2 110,000 110,000 2002 Airman Air Compressor (382) 13Veh# 382 2 23,000 23,000 2001 Case Front-End Loader (312) 14Veh# 312 3 129,700 129,700 2002 Case Front-End Loader (316) 14Veh# 316 3 129,700 129,700 2001 Int'l Dump Truck (321) 14Veh# 321 3 115,075 115,075 2001 Dodge Utility Truck (345) 14Veh# 345 3 46,875 46,875 1986 Hudson Trailer (394) 14Veh# 394 3 15,000 15,000 2006 Ford 1-Ton Dump Truck (325) 15Veh# 325 4 58,395 58,395 2002 ODB Leaf Vacuum Trailer (361) 15Veh# 361 4 42,120 42,120 2006 Int'l Sweeper (361) 16Veh# 356 4 195,075 195,075 Public Services-Streets Total 301,083 522,424 436,350 100,515 195,075 1,555,447 Tax Assessor 2002 Dodge Stratus 12Veh# 4 2 20,000 20,000 Tax Assessor Total 20,000 20,000 GRAND TOTAL 728,875 1,427,845 936,938 689,201 310,957 4,093,816 Wednesday, March 02, 2011