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Legislative, Finance, and Administration Committee. Jan 10, 2011.

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LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE AGENDA January 10, 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 (736-7008 or e-mail at Tmcdowell@dover.de.us) should you wish to be recognized. AGENDA ADDITIONS/DELETIONS 1. Review and Recommendation - Filling Critical Positions - Local Area Network (LAN) Analyst - Information Technologies Department 2. Presentation - Public Financial Management - Final Results of 2010 Electric Revenue Bond Refunding (Geoff Stewart) 3. Authorization to Purchase - Vehicle Computers/In-Car Camera Systems 4. Accounting Procedures for Federal Forfeiture Funds 5. Proposed Ordinance #2010-01 - Chapter 102 – Taxation, Article I - In General, Section 102-1 - Annual Valuation and Assessment and Proposed Companion Ordinance #2011-02 - Chapter 102 - Taxation, Article IV - Abatement of Real Estate Taxes, (New) Section 102-117 - Construction of new facility (On January 25, 2010, City Council Approved the Committee's Recommendation that the City Assessor's Office, the City Manager's Office, and the Real Estate Community Meet to Attain a Workable Solution Within 90 Days) 6. Adjournment by 7:00 P.M. /tm S:\AGENDAS & MINUTES\Committee-Agendas\2011\01-10-2011 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.

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Two Logan Square 215 567-6100 Suite 1600 215 567-4180 fax 18th & Arch Streets www.pfm.com Philadelphia, PA 19103-2770 Public Financial Management, Inc. PFM Asset Management LLC PFM Advisors January 3, 2011 Donna S. Mitchell, Controller & Treasurer City of Dover, Delaware 5 East Reed Street, Suite 300 Dover, DE 19901 FINANCIAL ADVISORY MEMORANDUM Dear Ms. Mitchell: Public Financial Management, Inc. (“PFM”) is pleased to provide this Financial Advisory Memorandum to the City of Dover (the “City”) describing the structure and pricing of $8,810,000 Electric Revenue Refunding Bonds, Series 2010 (the “Bonds”). The Bonds are being issued to refund $11,430,000 of the City’s outstanding Electric Revenue Bonds, Series 2004 for savings. Plan of Finance The plan of finance was developed to meet the following objectives: 1) optimize the refunding of prior debt for savings to lock in historically low tax-exempt fixed rates; and 2) structure the refunding bonds to provide debt service savings in fiscal years 2011-2016. Interest Rates at Historic Lows The chart below plots AA tax-exempt revenue bond interest rates over the last decade to provide some perspective. Remarkably, at the time of sale, interest rates on bonds with maturities 1 to 5 years had been lower only 1% of the time in the last ten years. Historical AA Tax Exempt Revenue Bond Interest Rates November 2000 to present 4.5 4 3.5 3 Interest Rates % 2.5 2 1.5 1 0.5 0 Nov-00 Nov-01 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 1 year 3 year 5 year

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City of Dover, Delaware Electric Revenue Refunding Bonds, Series 2010 Financial Advisory Memorandum 1/3/2011 PFM coordinated with bond counsel and the City to issue a conditional redemption notice for the 2004 Refunded Bonds prior to closing, rather than issuing a standard redemption notice after closing. By issuing a conditional redemption notice prior to closing, the City enhanced savings by eliminating over $17,000 of expenses, including (i) establishing a refunding escrow account, (ii) employing a verification agent, and (iii) 30 days of negative arbitrage on the reinvestment of refunding bond proceeds. Summary of Bonds Refunded Series 2004 Refunded Bonds Maturity Date Interest Rate Par Amount Call Date Call Price 7/1/2011 4.60% 2,080,000 11/17/2010 Par 7/1/2012 4.75% 2,180,000 11/17/2010 Par 7/1/2013 4.95% 2,270,000 11/17/2010 Par 7/1/2014 5.05% 2,390,000 11/17/2010 Par 7/1/2015 5.10% 2,510,000 11/17/2010 Par Consistent with the objectives in the plan of finance, the refunding bonds were structured to target debt service savings in fiscal years 2012-2016, providing welcome budgetary relief and bolstering debt service coverage during an economic downturn. The average annual debt service savings in fiscal years 2012 – 2016 is $640,000. Electric Revenue Bond Debt Service Before and After Issuance of the Refunding Bonds 4.5 Millions $ 4.0 Average Annual Debt Service Savings $640k 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Debt Service After Issuance of Refunding Bonds Debt Service Prior To Issuance of Refunding Bonds

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City of Dover, Delaware Electric Revenue Refunding Bonds, Series 2010 Financial Advisory Memorandum 1/3/2011 Over the life of the loan, the City will realize $3,470,838 in gross debt service savings or $1,016,580 on a net present value basis. The table below summarizes some of the key refunding statistics. Refunding Savings Statistics Par Amount of Refunded Bonds $11,430,000 Average Coupon of Refunded Bonds 5.00% Par Amount of Refunding Bonds $8,810,000 Arbitrage Yield of Refunding Bonds 1.134% Present Value Savings $ $1,016,580 Present Value Savings % (1) 8.89% (1) As a % of refunded bonds Source & Uses of Funds City of Dover, Delaware Electric Revenue Refunding Bonds, Series 2010 Series 2010 Sources of Funds Bond Proceeds Par Amount 8,810,000.00 Net Bond Premium 627,867.00 Other Sources of Funds 2004 Interest & Sinking Fund 889,295.95 Debt Service Reserve Fund 1,470,000.00 Total Sources of Funds 11,797,162.95 Uses of Funds Redemption of 2004 Bonds 11,641,668.89 Cost of Issuance 130,246.36 Underwriter's Discount 25,247.70 Total Uses of Funds 11,797,162.95

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City of Dover, Delaware Electric Revenue Refunding Bonds, Series 2010 Financial Advisory Memorandum 1/3/2011 Series 2010 - Competitive Sale The Bonds were sold competitively via PARITY – the free internet sealed bid platform from i-Deal. Eight bids were received at 10:30 am on November 10, 2010. The table below ranks the bids received from low to high by true interest cost (TIC). PFM independently verified each of the bids received to confirm the TIC and to ensure each bid conformed with the specifications set forth in the Notice of Sale. Once verified, the City awarded the Bonds to J.P. Morgan Securities. Upon notice of award, J.P. Morgan Securities provided the re-offering yields and prices for the Bonds. The gross underwriting spread charged by J.P. Morgan Securities was $25,247.70 or 0.2865% of the par amount of the Bonds. This spread is very aggressive and below market pricing which further enhanced savings realized by the City. Spread to Bidder TIC Winning Bid J.P. Morgan Securities LLC 1.2351% - TD Securities 1.2486% 0.013% Robert W. Baird & Co. Inc. 1.2779% 0.043% Hutchinson, Shockey, Erley & Co. 1.3401% 0.105% Morgan Stanley & Co Inc 1.3454% 0.110% Southwest Securities, Inc. 1.3772% 0.142% BMO Capital Markets 1.5145% 0.279% Stifel Nicolaus & Company, Inc. 1.5188% 0.284% City of Dover, Electric Revenue Refunding Bonds Series 2010 Final Pricing Maturity Principal Coupon Yield CUSIP 7/1/2011 1,670,000 2.00% 0.43% 260039JD5 7/1/2012 1,700,000 2.00% 0.71% 260039JE3 7/1/2013 1,740,000 3.00% 0.90% 260039JF0 7/1/2014 1,810,000 4.00% 1.17% 260039JG8 7/1/2015 1,890,000 5.00% 1.43% 260039JH6

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City of Dover, Delaware Electric Revenue Refunding Bonds, Series 2010 Financial Advisory Memorandum 1/3/2011 Conclusion We are extremely pleased with the timing and results of this financing which locked in an incredibly low 1.23% fixed rate cost of capital for the 4.5 years remaining on the loan. This is the lowest fixed rate ever secured by the City on a loan of this size and tenor. Further, the refunding reduced the par value of the City’s Electric Revenue Bonds outstanding by $2,620,000 and generated gross debt service savings in excess of $3,400,000 with average annual debt service savings of $640,000 in fiscal years 2012 - 2016. PFM appreciates the opportunity to serve as the City’s financial advisor. If you have any questions, please call us at (215) 567-6100. Sincerely, Public Financial Management Geoffrey Stewart Geoffrey Stewart Senior Managing Consultant

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ACTION FORM PROCEEDING: 1/10/11 Legislative and Finance Committee AGENDA ITEM NO.: DEPARTMENT OF ORIGIN: Police DATE SUBMITTED: 12/1/10 PREPARED BY: Captain Steven Getek / Administrative Division Commander SUBJECT: Vehicle Computers/In-Car Camera Systems Purchase REFERENCE: Budget & Grant Funding RELATED PROJECT: N/A APPROVALS: City Manager, Controller/Treasurer EXHIBITS: Photos Attached. EXPENDITURE REQUIRED: $72,416.10 PROJECT BUDGET: $72,416.10 FUNDING SOURCE (Dept./Page in CIP & Budget): Budget & Grant (see attached breakout) TIMETABLE: Budget & grant funding is currently available. Equipment can be received within 30 days after order is placed. Receipt of vehicles expected in late February 2011. RECOMMENDED ACTION: Council approve the project and purchase as requested. BACKGROUND AND ANALYSIS We request the purchase above be approved as an allowable Sole Source Procurement because a new configuration of computers, in-car camera equipment and associated parts/accessories is required to fit within the smaller space constraints of new/future police vehicles. This will minimize impacts to officer safety in the vehicles from the space constraints and reduce operational and maintenance costs for the city over in the long term. We incorporated digital video technology in police vehicles with the purchase of 10 digital cameras and server through a sealed bid process approved by city council in January 2007. The initial purchase totaled $99,025 and the cameras were installed as separate stand alone units from the computers already installed in the vehicles. Several additional units were subsequently purchased to total 22 units currently in use in our police fleet. This solution worked as long as the larger model police sedan, the Ford Crown Victoria, was available. However, in 2011, (vehicle model year 2012) the Crown Victoria will no longer be available. Ford is downgrading their police interceptor vehicle model to the Ford Taurus, which is much smaller. Other police interceptor models available from other manufacturers include the Dodge Charger and Chevy Impala. Both are comparable in size to the Ford Taurus. Since police officers come in all sizes, space constraints inside the vehicle automatically become a major issue because as equipment is added to the officer occupied space inside a vehicle, its placement often interferes with the deployment of air bags and other safety/vehicle equipment as well

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as the officers’ ability to comfortably use the vehicle and equipment. As a result, the department has been researching other vehicle equipment combinations and configurations during the past year to find a solution that could best balance these concerns. After reviewing several models of computers and in-car cameras, we found an integrated system for both that also installs easily into the glove box and AM/FM radio spaces of many vehicles, without impacting airbag deployment. It is the only model that also provides secure access to the in-car camera media to satisfy evidence internal control standards. As a result, we contracted with the vendor (Hub-Data911) to test two versions of the equipment in two Ford Crown Victoria vehicles; one with an integrated computer/in-car camera system and the other was a stand alone in-car camera. Both setups tested have been received extremely well by our officers in terms of ease of use and impact on space. FUNDING A combination of budget and grant funds will be sourced for this purchase. Budget funds programmed for annual recurring mobile data computers (MDC) replacements as well as funds for vehicle equipment replacements will be combined with available Justice Assistance Grant funding to complete this purchase. In addition, we would like to continue the purchase of these systems into future years to replace the current configuration of equipment in the vehicles as they are replaced through the normal vehicle replacement cycle. As the process continues, savings in maintenance costs will be realized as the number of vendors needed to provide maintenance will be minimized. Following is a breakout of the funds for this purchase: Funding Sources Amount FY11 Budget (20-37 acct) – mobile data computers (MDCs) $23,400.00 FY11 Budget (30-63 acct) – vehicle equipment 11,400.00 Justice Assistance Grants 37,616.10 Total $72,416.10 ACTION REQUESTED The Legislative and Finance Committee recommend Council approval for the Police Department to purchase the new configuration of computers and in-car cameras for its vehicles as well as the continued purchase of these items for future years as part of the normal recurring replacement cycle.

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City of Dover Finance Department PO Box 475 Dover DE 19903-0475 Phone: (302-736-7018 FAX: (302) 760-4930 E-Mail: dmitchell @dover.de.us MEMORANDUM To: Members of Legislative, Finance, & Administration Committee From: Donna Mitchell, Controller/Treasurer Chief Hosfelt, Police Chief Copy: Mayor, City Council, City Manager, City Clerk, & Asst. Finance Director Date: December 29, 2010 Subject: Accounting Procedures for Federal Forfeiture Funds Background This past summer, it was brought to my attention that a separate bank account was being maintained by the Police Department and the transactions were not being accounted for in the City’s records. I met with Chief Hosfelt and he confirmed that this statement was correct. Chief Hosfelt also agreed to provide the documentation to have a compliance review completed of the deposits and disbursements and to explain to City Council the existence of the account and the purpose for which it was being used. Chief Hosfelt provided a discussion on the Criminal Investigation Fund to the Legislative, Finance, & Administration Committee on August 23, 2010. It was agreed that once all records and documents have been transferred to the Finance Department and an audit has been performed, an update will be provided to Committee members. Update Chief Hosfelt and the Police Department staff worked cooperatively with the Finance Department to close out the separate bank account and deposit the cash balance into our City account we currently use for Law Enforcement Grants. All activity is now being processed through the City’s accounting system in compliance with all policies and procedures. Please note, the previous bank account was being reconciled, financial reports were being prepared by the Police Department, and controls were in place to prohibit unauthorized spending per the Department’s internal policies. However, these activities were not shared with anyone outside of the Police Department. The Chief agreed to a compliance review conducted by the City auditor, Faw, Casson & Company, LLC to be paid for out of the federal forfeiture funds. It was decided to review a sample of transactions back to July 2006 (4 years) for time and cost purposes. Faw, Casson’s report is attached for your review. Most of the non-compliance items were a result of not using the City’s financial systems and has now been remedied. Also attached is a summary of the Fund Balances, Receipts, and Disbursements for the four years reviewed.

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Accounting Procedures for Federal Forfeiture Funds December 29, 2010 Staff Recommendations We recommend that annual budgets be established for Police Grants and all other Criminal Investigation Funds. All estimated receipts and planned disbursements be adopted through the budget process and accounted for in the same manner as all other funds to insure visibility and accountability of the use of these funds. Everyone understands, through the use of the City’s budgeting and financial systems all policies and procedures will be adhered to. Until such time a budget can be established the Finance Department will issue a summary of activity for these funds in conjunction with our monthly report. Use of Federal Forfeiture Funds Federal Forfeiture Funds come with some restrictions for their use. We have included a summary of permissible uses and impermissible uses. General restriction – Sharing must be used to increase or supplement the resources of the receiving local law enforcement agency. Shared resources shall not be use to replace or supplant the appropriated resources of the recipient. The agency must receive a benefit from the shared funds. Example – A police department receives $100,000 in federal sharing money only to have its budget cut $100,000 by city council. In this instance, the police department has received no direct benefit from equitable sharing. Rather, the city as a whole has. Permissible Uses Law enforcement investigations Language assistance services Law enforcement training Transfers to other law enforcement agencies Law enforcement and detention facilities Law enforcement awards and memorials Law enforcement equipment, furniture, supplies Asset accounting and tracking; Grant audits Law enforcement travel and transportation Support of community based programs Drug and gang education and awareness Matching funds for the agency’s matching programs contribution in a federal program Pro rata funding – for the Police departments Exercise prudence to avoid the appearance of share of interdepartmental items or facilities. i.e. extravagance, waste, or impropriety computerized payroll system with 20% use for police payroll Impermissible Uses Salaries & benefits of current personnel unless Use of forfeited property by non-law permitted by: enforcement personnel. Includes equipment; (1) Express statutory authorization – i.e. Payment of education-related costs COPS program matching funds Uses contrary to the laws of the state or local (2) Overtime of officers and investigators government (3) New positions. First year salary & Non-official government use of shared assets benefits of a new officer that Purchase of food and beverages, unless for a supplements the current force conference package policy or meals during local (4) Salary of an officer hired to replace an operation officer assigned to a task force Page 2 of 3

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Accounting Procedures for Federal Forfeiture Funds December 29, 2010 Federal Forfeiture Funds 2007 2008 2009 2010 Beginning Balance $ 73,475.84 $ 34,709.68 $ 15,533.02 $ 187,855.42 Receipts 20,223.32 6,288.49 208,678.31 8,939.93 Expenditures (58,989.48) (25,465.15) (36,355.91) (55,015.99) Ending Balance $ 34,709.68 $ 15,533.02 $ 187,855.42 $ 141,779.36 A hold was put on non-essential spending from this account until the auditor completed their review. We have received additional federal funds this fiscal year and the cash balance as of December 31 is $166,986. Included with the January monthly report will be a financial report on Police Grants for this fiscal year as included in the staff recommendation. Page 3 of 3

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