Attachment

LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE AGENDA January 22, 2007 - 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. Expansion of Voluntary Curbside Recycling Supported by Dover (Tabled by Committee January 8, 2007) 2. Discussion - Moratorium on Hiring 3. Debt Management Policy Review 4. Evaluation of Bids - Purchase of ArcGIS Server 5. Adjournment by 7:00 P.M. /tm S:\ClerksOffice\Agendas&Minutes\Committee-Agendas\2007\01-22-2007 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.

ACTION FORM TITLE: Expansion of Voluntary Curbside Recycling Supported by Dover AGENDA ITEM: 1/22/07 – 1 (Tabled by Committee 1/8/07) PROCEEDING: Legislative, Finance and Administration DEPARTMENT OF ORIGIN: City Manager’s Office PREPARED BY: Terry Tieman SUBJECT: Voluntary Curbside Recycling DATE SUBMITTED: 12/11/06 RELATED PROJECT: Current Customer Paid Voluntary Curbside Recycling APPROVALS: City Manager EXHIBITS: N/A EXPENDITURE REQUIRED: $36,000 annually (1,500 customers @ $2 per month) AMOUNT BUDGETED: N/A See note below * FUNDING SOURCE (Dept./Page in CIP & Budget): City of Dover Annual Operating Budget, Page 356 Line item 110-1800- 555.30-31 TIMETABLE: Implementation would be February 1, 2007 RECOMMENDED ACTION: Authorize the City Manager to sign a contract with the Delaware Solid Waste Authority (DSWA) to provide City of Dover supported voluntary curbside recycling at a cost of $24 per year per participating resident for every other week pickup. BACKGROUND AND ANALYSIS: Beginning in October 2005, the City of Dover began offering voluntary curbside recycling to its citizens through the DSWA. We have experienced significant success with this curbside recycling program over the past year. To date, over 575 Dover residents are enrolled in the program. Of that number, over 50% participate weekly. Most people do not have a need to put out recycling on a weekly basis and are saving several weeks of recycling before putting it out. Participants put out an average of 25 pounds per week and a cumulatively average of about 7,512 pounds of recyclables per week. City staff and the DSWA are interested in expanding this program to other citizens of Dover so that residents of all economic strata would benefit. The DSWA has offered the City a proposal for pickup on an every other week basis since it does not appear that weekly pickups are needed. DSWA would charge the City of Dover $2 per household enrolled per month for this service. This arrangement is similar to what the City of Milford does except that Dover’s program would be structured for citizens who want to voluntarily enroll and not for every citizen to be enrolled automatically. This means Dover only pays for citizens who enroll. The program would be principally funded from savings which result in diverting recyclables from the landfill. The calculation is based on October 2006 City of Dover results and is as follows: Average pounds of recycling from Dover customers annually = 676 (13 lbs./week x 52 weeks). Estimated number of customers participating in the supported program = 1,500 (approx. three times the current enrollment) x 676 lbs = 1,014,000 lbs. per year or 507 tons per year. 507 tons per year x $51.50 per ton ($61.50 per ton minus the DSWA rebate of $10 per ton) = $26,110.50 estimated total annual savings in landfill fees. In addition to these savings, there would be reduced expenses associated with reduction of gasoline and maintenance expense, and labor by reducing the number of trips to the landfill by approximately 83. Man hours not spent traveling to the landfill (approximately 62.5) can be focused on providing more efficient service within the City. The savings estimated for reduced gasoline expense is $1,236 and the manpower savings estimated is $1,604. Additionally, no savings from the actual wear and tear on the trucks were calculated. This would mean the City would pay $7,049.50 per year for a City supported recycling program. These are conservative estimates since there has never been a program of this type. We believe having a city supported voluntary curbside arrangement would encourage greater participation and savings for Dover. It would also make recycling easy and accessible to all especially since the City of Dover and DSWA recently lost three (3) drop-off centers for recycling due to new out of state shopping center ownership. DSWA records indicate that residents who once used these centers for recycling stopped recycling due to inconvenience. *Note: The estimated cost of the program to the City after accounting for savings would be $7,049.50 per year. Currently the line item for landfill fees (110-1800-555.30-31) shows favorability to date and can support the additional expense.

Memorandum Office of the City Manager PO Box 475 Dover, DE 19903 Phone: (302) 736-7005 FAX: (302) 736-7002 E-mail tdeprima@dover.de.us To: Legislative, Finance, and Administration Committee Members From: Anthony J. DePrima, AICP City Manager Date: January 17, 2007 Subject: Hiring Freeze During the December 11, 2006 Joint Legislative, Finance, and Administration Committee and Utility Committee meetings, when considering the need for electric rate increases, a motion was made by Councilman Carey and seconded by Councilman McGlumphy to impose a hiring freeze to reduce costs, and to signal bond rating companies about the seriousness or our efforts to have our electric rates satisfy our bond covenant. City Council did not pass the motion but instead Mr. Hogan moved to table the action pending further information on the current vacancies and the establishment of a hiring plan for the remainder of the fiscal year. The motion was seconded by Mr. Carey and unanimously carried. Then Mr. Slavin moved to direct the Budget Team to prepare a list of positions that are currently vacant and a hiring plan for the remainder of the fiscal year. The motion was seconded by Mr. Carey and unanimously carried. Attached is the current list of vacancies. As you will see, in an organization as large as ours the list is always changing. Since the December 11th meeting ten (10) positions have been added to the list. In general I do not believe hiring freezes are a good budget management tool simply because of the chance nature of vacancies; they are completely unplanned and there is always a chance that no vacancies will occur. This randomness gives no assurance of any savings therefore its value to the bond rating agency is questionable. To my knowledge we received no advice either from bond rating agencies or our financial advisor that a hiring freeze would help satisfy their concerns. In addition, the randomness of vacancies could impact operations and services, particularly for small departments. For example, since the original proposal the Assistant City Clerk position has become vacant. This is a four person office, with one person already on extended leave. If

this position were not filled, the loss of that one person is the equivalent of losing 25% of the workforce (33% due to the current leave of absence.) The randomness could also impact critical positions, for example the Library Director. My plan for the remaining fiscal year is as follows: 1. Continue using the Hiring Justification Outline (attached) as a tool to determine the level of need for filling a position. I will categorize new vacancies as follows: 1) Critical; 2) Hold until off the Moody’s watch list; and 3) Permanent hold while reevaluating the position. 2. Consider the following positions critical and continue hiring process: 1) Assistant City Clerk; 2) Payroll Specialist; 3) Library Director; and 4) Administrative Assistant – Tax Office. 3. Continue filling the following positions because they have been vacant for some time, and we have completed the process and are ready to offer the position or have already offered the position: 1) MEO II – Construction; and 2) T&D Engineering Coordinator. 4. Hold on hiring the following positions until the City is off of the Moody’s watch list: 1) Groundworker; 2) Inspector I; 3) MEO I – Streets; 4) Account Clerk I; and 5) MEO I –Water/Wastewater. 5. The following positions have been in a virtual freeze due to our inability to fill the positions; therefore, I want to continue advertising to ensure that good candidates surface: 1) Electrical Engineer; 2) Civil Engineer; and 4) Programmer Analyst. While these positions are vacant, we are fulfilling the critical needs of the departments through consultants. 6. I may, from time to time, move positions from a category depending on the duration, season, or other circumstances. /dej Attachments (2) c:Tony/City Manager/City Council Hiring Freeze.

Hiring Justification Outline 1. Explain the principal function of this job. 2. Explain why this position is critical and cannot go unfilled or postponed. 3. How would City services diminish if this position were not filled or postponed at this time? 4. Are there other employees whose ability to perform would be diminished by not filling or postponing this position? 5. Is there a person that can be promoted into this position and whose position is less critical at this time and can go unfilled permanently or temporarily? 6. Can one or more existing employees absorb the duties of this position? 7. Could a temporary person be hired to fill this position for 60 days? Rev. 7/22/02

1/17/2007 Position Date Posted Status Electrical Engineer II or I 2/26/2006 Recruitment on-going. No qualified applications received. Civil Engineer 6/22/2006 Recruitment on-going. No qualified applications received. Programmer Analyst 8/24/2006 Recruitment on-going. No qualified applications received. Motor Equipment Operator I - Water 10/12/2006 Process slowed due to flushing schedule 2 positions 1 employee began 1/16/07 Another qualified applicant still being sought Awaiting request from dept. to repost MEO II - Construction 10/24/2006 Offer pending contact with Applicant T&D & Engineering Coordinator 10/25/2006 Interviews conducted and position offered Applicants declined position Second round of interviews held on 1/11/07 Awaiting recommendation from department Groundworker 12/14/2006 Interviews being conducted 1/19/07 Inspector I 12/21/2006 Closed 1/12/07 38 apps received Library Director 12/28/2006 Assistant City Clerk 1/4/2007 Payroll Specialist 1/11/2007 Administrative Assistant - Tax Assessor 1/11/2007 MEO I - Streets (Night Sweeper) 1/11/2007 Account Clerk I - 2 positions 1/17/2007 H: Open Positions

ACTION FORM PROCEEDING: Legislative, Finance, & Administrative AGENDA ITEM NO.: 1/22/07 - 3 DEPARTMENT OF ORIGIN: Finance DATE SUBMITTED: 1/22/07 PREPARED BY: Donna Mitchell SUBJECT: Debt Management Policy REFERENCE: N/A RELATED PROJECT: N/A APPROVALS: Legislative, Finance, & Administrative Committee & City Council EXHIBITS: Draft Debt Management Policy EXPENDITURE REQUIRED: N/A AMOUNT BUDGETED: FUNDING SOURCE (Dept./Page in CIP & Budget): TIMETABLE: N/A RECOMMENDED ACTION: Staff recommends approval of the Draft Debt Policy BACKGROUND AND ANALYSIS The attached Debt Management Policy has been developed to provide City officials with a set of guidelines to follow for planning and execution of the Capital Investment Plan along with guidance for managing our current debt. In summary, it provides debt management objectives, permitted types of debt, guidance for refinancing current debt, debt planning and oversight. One of the key concepts is the development of a financial model in conjunction with the budget and CIP process to determine debt affordability prior to presenting the budget to City Council for approval. The model will include a five year forecast much like the Electric analysis we just completed. It will also provide Council with a better idea of the impact of new debt on future years as well. While this process adds another step to our budget process, we believe it is worth the effort to assist everyone in understanding current and future cost of service. . The policy takes into consideration State law and Charter restrictions. Section V includes (parenthetically) the recommendations that were made to the Charter Review Committee. However, they will be removed from the policy until such time the Charter is changed.

LF&A 1/22/07 Item 3 1 of 14 City of Dover Draft Debt Management Policy I. Purpose of Policy The City recognizes the foundation of any well-managed debt program is a comprehensive debt policy. A debt policy sets forth the parameters for issuing debt and managing outstanding debt and provides guidance to decision makers regarding the timing and purposes for which debt may be issued, types and amounts of permissible debt, method of sale that may be used and structural features that may be incorporated. The debt policy should recognize a binding commitment to full and timely repayment of all debt as an intrinsic requirement for entry into the capital markets. Adherence to a debt policy helps to ensure that a government maintains a sound debt position and that credit quality is protected. Advantages of a debt policy are as follows: • Enhances the quality of decisions by imposing order and discipline, and promoting consistency and continuity in decision making, • Rationalizes the decision-making process, • Identifies objectives for staff to implement, • Demonstrates a commitment to long-term financial planning objectives, and is regarded positively by the rating agencies in reviewing credit quality. The City understands that incurring long-term debt serves to obligate future taxpayers or ratepayers. Excess reliance on long-term debt can cause debt levels to reach or exceed the government’s ability to pay. Therefore, conscientious use of long-term debt will provide assurance that future residents will be able to service the debt obligations left by former residents. The Treasurer/Finance Director is responsible for implementation and oversight of the City’s debt policy. II. Debt Management Objectives • Maintain cost-effective access to the capital markets through prudent practices; • Maintain current credit rating and when possible enhance current credit rating in order to reduce interest costs; • Assess risks and benefits associated with all options available to the City for any bond issue, including fixed and variable rate debt; • Determine the amortization schedule that will best fit within the overall debt structure; • Avoid financial decisions that can negatively impact credit ratings; • Analyze the effects on pertinent debt and capital ratios: • Issue debt to finance capital construction, improvements, or acquisitions so as to be integrated with the City’s long-term Capital Investment Plan;

LF&A 1/22/07 Item 3 2 of 14 III. Legal Governing Principles In the issuance and management of debt, the City shall comply with the City Charter and with all other legal requirements imposed by federal, state, and local rules and regulations, as applicable. IV. Permitted Debt by Type Under the provisions of the code, the Mayor and Council may issue debt to pay down the cost of acquiring, constructing, or improving capital assets or to meet its cash flow needs. The Council should not finance general operating costs from debt having maturities more than one year. General operating costs include, but may not be limited to, those items normally funded in the Council’s annual operating budget and having a useful life of less than one year. However, the Council may deem it necessary to finance cash flow requirements pursuant to the Charter, Section 50(a). A. Short-Term Debt The Council may issue short-term debt when such instruments allow the Council to meet its cash-flow requirements or provide increased flexibility in its financing program. Short-term debt includes, but is not limited to, tax anticipation notes, lines of credit and commercial paper, and interfund loans for short-term cash flow needs. Short-term debt may be variable rate debt. B. Long-Term Debt The Council may issue long-term debt when the duration of the debt issue is consistent with the economic or useful life to the improvement or asset the issue is financing. Long- term debt shall be fixed rate debt in order to better project cash flow requirements. Long- term debt may include, but is not limited to the following: 1. General Obligation Bonds – General Obligation (G.O.) bonds are secured by the general credit and full revenue powers of the City; that is, the full faith and credit of the City. It is not debt specific to a specific fund. All general obligation bonds must be approved by the Council and can be sold in competitive or negotiated sales. The City will finance its long-lived municipal improvements over the estimated life of the improvement, not to exceed twenty years. The principal payments shall be structured such that 60% is repaid within the first half of the estimated life of the improvement. General Obligation Bonds may require voter approval 2. Revenue Bonds – This is debt payable from a specific pledged revenue source or special assessments, typically in the Electric Revenue and Water/Wastewater Funds. These bonds are subject to covenants which limit the total debt service for the fund to a percentage of the qualified expenditures of that fund. All revenue bonds must be approved by the Council. The City will finance its system and infrastructure improvements over a term not to exceed the lesser of 30 years or the

LF&A 1/22/07 Item 3 3 of 14 life of the improvement. Revenue bonds can be sold in competitive or negotiated sales. Revenue Bond sales shall be structured to achieve level debt service payments to the extent possible taking into consideration the costs of such financings. The City Revenue bonds do not require voter approval. 3. Capital Leases - This is debt payable for the purchase of and secured by specific capital equipment. Ownership transfers upon final payment. Capital Leases shall not exceed the life years of the equipment being leased. All Capital Leases must be approved by the Council. 4. Tax and Revenue Anticipation Notes (TRANs) - The Treasurer/Finance Director may ascertain the need to fund internal working capital cash flow. Before issuing such notes, cash flow projections shall be prepared and reviewed by the Legislative, Finance, and Administrative Committee of the Council, which may report to the Council with a recommendation to approve a TRAN. TRANs may be sold in either a competitive or negotiated sale. All TRANs must be approved by the Council. 5. State Revolving Loan Fund - Delaware has revolving loan funds which are long-term debt issued at below market interest rates for municipalities to fund designated programs. As funds are repaid to the state by the various debtors, they are made available to other qualified applicants for the loan. All State Revolving Fund Loans must be approved by the Council. C. Refunding Debt The City shall review its outstanding debt annually for the purpose of determining if the financial marketplace will afford the City the opportunity to refund an issue and lessen its debt service costs. In order to consider the possible refunding of an issue a Net Present Value savings of three percent over the life of the respective issue, at a minimum, must be attainable. The NPV savings will include consideration of all fees and legal costs. The City may also refund or restructure bonds when existing bond covenants impinge on prudent and sound financial management. V. Restrictions on Debt Issuance A) Charter Restrictions – Section 50 i. Tax or revenue anticipation notes shall not exceed one (1) percent of the total taxable assessment for a general tax, and shall be paid back out of current revenue received thereafter, and shall require approval of three- fourths vote of Council and approval of the Mayor. (Section 50(a)) ii. General Obligation aggregate indebtedness cannot exceed one (1) percent of taxable assessment for a general tax at the time such new bonds are issued. Requires three-fourths vote of Council and approval of the Mayor. (Section 50(c)(i)) iii. The aggregate of amounts borrowed together with all other bonded indebtedness for which the full faith and credit of the City has been

LF&A 1/22/07 Item 3 4 of 14 pledged shall not at any time exceed a sum equal to twenty-five (25%) percent of the total assessed value of real property. (Recommended changing this to 2% - Charter Review Committee) iv. The amounts borrowed greater than $1,000,000 issued (General Obligation) at any one time shall first be approved by a referendum vote of the qualified voters of the City of Dover. (Recommended to Charter Review Committee to changing this to one quarter of a percent of assessed taxable value, or .25%) B.) Debt Service Limitations i. Debt service payments (principal and interest) shall not exceed 8% of recurring General Fund revenues for all general obligation bonds. ii. General Obligation direct debt shall not exceed $700 per capita. iii. Revenue Bonds will adhere to all bond covenants and shall include Trustee held debt service reserve accounts. iv. Tax Exempt Bonds will have arbitrage calculations performed every five years as required by the Internal Revenue Code. v. No City debt issued for the purpose of funding capital projects may be authorized by the City Council unless an appropriation has been included in the Operating Budget and the debt issue was presented in the Capital Investment Plan. VI. Planning and Oversight of City Indebtedness A. Overview The City plans long- and short-term debt issuance to finance its capital program based on its cash flow needs, sources of revenue, capital construction periods, available financing instruments and market conditions. The Capital Investment Plan projects the capital needs of the City for the next five years. The City shall prepare cash flow projections for the general, water/wastewater, and electric funds for five years along with the attendant debt and capital ratios as presented in Appendix A. The financial impact of these projections and ratios shall be considered by the Council before any new debt instrument is approved. The financial projections will include developer contributions, assessments, or impact fees when planned construction projects (i.e. extensions) benefit a small sector of the service area or small group of customers. Projects to replace or upgrade the trunk systems that benefit all customers of the system will be financed through operating revenues. B. Roles and Responsibilities The City shall maintain a combination of in-house and contracted professionals to complete all debt issuance transactions. The primary responsibilities shall be handled by the Finance Director, City bond counsel, and a Financial Advisor. Other services may be provided as determined necessary by this three person team.

LF&A 1/22/07 Item 3 5 of 14 1. City Council shall authorize bond issues and the selection of all relevant service providers is the responsibility of the City Council. A representative or appointee of the Council is to attend all competitive sales and appropriate bid openings. The Legislative, Finance and Administrative Committee is responsible to provide recommendations to the Council for the need for debt issuance, selection of service providers, and presentation of all pertinent information. 2. The Finance Director oversees and coordinates the timing, issuance process and marketing of the City’s borrowing and capital funding activities required in support of the Capital Investment Plan. In this regard, the Director shall have responsibility as delineated in Appendix B. 3. Financial Advisors shall be selected by means of an RFP from a selected pool of such advisors to mitigate time constraints and reduce overhead costs of the City in procuring such services. Once selected, the City shall require a new RFP for each new issue or refinancing every five years. The City may replace a financial advisor with notice at any time. The financial advisor shall provide transaction specific and ongoing services including, but not limited those as described in Appendix C. 4. Bond Counsel shall include a written opinion affirming the City is authorized to issue the proposed debt and has met all legal requirements. The City may replace a bond counsel with notice at any time. The Bond Counsel shall prepare all documents and perform all advisory functions, including the services as described in Appendix D. 5. Letter of Credit Bank or Liquidity Facility Provider Bank. In the issuance of variable rate debt, the City shall procure a letter of credit or line of credit in support of such variable rate debt. The bank shall be evaluated based on its experience in providing liquidity facilities to municipal bond issuers, the credit ratings of the bank, and the competitiveness of its fees based on a market analysis of such fees. 6. Verification Agent. For refundings, the City shall procure the services of a verification agent. The verification agent confirms that sufficient proceeds are escrowed to ensure the timely repayment of principal and interest. The verification agent shall be selected based on ability to provide accurate and timely information and competitiveness of fees, based on a market analysis of such fees. The City may replace a verification agent with notice at any time. 7. Underwriters. For negotiated sales, underwriters are selected to structure the debt and sell debt to institutional and retail investors. They shall be selected based on demonstrated ability to perform these functions, be recommended by the Financial Advisor and/or Bond Counsel. The City may replace underwriters with notice at any time. 8. Trustees. For all bond issues, the City shall select a trustee to hold and invest the funds of the bond issue. The City may replace a trustee with notice at any time.

LF&A 1/22/07 Item 3 6 of 14 9. Auction Agents. For all relevant issues, the City shall select an auction agent to conduct the competitive bidding. The City may replace an auction agent with notice at any time. 10. Investment Agreement Counterparties. Repurchase Agreements or Forward Delivery Agreements shall be executed with counterparties rated at least AA (by at least on major rating agency) with downgrade provisions requiring assignment or collateral should the rating fall below A- or A3 by Standard and Poor’s and Moody’s, respectively. The City may replace Investment Agreement Counterparties with notice at any time. VII. Transaction-Specific Policies A. Presumption of Competitive Sale Unless otherwise justified and deemed necessary to minimize the costs and risk of the City’s debt issue, the issuance and sale of all long-term debt (with the exception of capital leases and State Revolving Loans) shall be achieved by competitive bid. B. Competitive Bid Method Any competitive sale of the City’s debt shall require approval of the City Council. The City’s debt issued on a competitive bid basis shall be sold to the bidder(s) proposing the lowest true interest cost to the City. Such bid may take the form of hand-delivered or electronically transmitted offers to purchase the bonds. The City may use the services of a financial advisor to administer the bid. C. Negotiated Bid When deemed appropriate to minimize costs and risks of the City’s debt issue, the Legislative, Finance and Administrative Committee shall submit to the City a request to sell the debt issue on a negotiated basis. If debt is sold on a negotiated basis, the negotiations of terms and conditions shall include, but not be limited to, prices, interest rates, underwriting or remarketing fees and commissions. All negotiated bids shall have a financial advisor who shall evaluate the terms offered by the underwriter(s) and comparisons with the terms and conditions in the marketplace for comparable issuers. The City shall require a post-sale analysis as described in the section Roles and Responsibilities, Financial Advisors, above. No debt issue shall be sold on a negotiated basis without an independent financial advisor. D. Private Sale The City shall only sell debt through private placement when necessary for a bridge loan to cover emergencies or project start ups. E. Refunding The City may refinance outstanding long-term debt when the public policy benefits of replacing such debt outweigh the costs associated with new issuance as well as any increase in annual debt service. The Director of Finance, with advice from the Financial Advisor and Bond Counsel, will recommend to the Legislative, Finance, and Administrative Committee when the opportunity to refinance will provide significant

LF&A 1/22/07 Item 3 7 of 14 benefit based on net present value savings. The potential realization of a significant reduction in overall debt service costs shall be considered a public policy benefit in preparing the recommendation. This may be accomplished either by advance refunding to the first call or by defeasance to maturity. F. Call Provisions The City seeks to minimize the protection bondholders receive from optional redemption. This is consistent with the City’s desire to obtain the lowest possible interest rate on its debt over time. The City will seek early calls at low premiums to allow it to refinance debt more easily when interest rates drop. The Director and the City’s Financial Advisor shall evaluate optional redemption provisions for each issue to assure the City does not pay unacceptable higher interest rates to obtain advantageous call dates. G. Investment of Bond Proceeds All investments of bond proceeds shall adhere to the City’s Investment Policy approved by the City Council. H. Communications with Credit Rating Agencies The Finance Director is responsible for maintaining relationships with rating agencies that assign ratings to the City’s various debt obligations. The credit objective of the City is to maintain the highest possible credit rating at all times. The Director is to from time to time report to the City Council the status of such ratings and describe the underlying elements of the activities of the City which the rating agencies indicate affect said ratings. Each month the Director shall provide the Council with the current covenant ratios for revenue bonds. The Director shall request ratings prior to the sale of securities from at least one nationally recognized rating agency. I. Credit Enhancements Credit enhancements (letters of credit, bond insurance, etc.) may be used, but only when net debt service on the bonds is reduced by more than the costs of the enhancement. J. Disclosure The City is committed to full and complete financial disclosure, and to cooperating fully with rating agencies, institutional and individual investors, City departments and agencies, other levels of government, and the general public to share clear, comprehensible, and accurate financial information. The City is committed to meeting secondary disclosure requirements on a timely and comprehensive basis. The City will comply with the standards of the Government Finance Officers Association for financial reporting and budgeting presentation and the disclosure requirements of the Securities and Exchange Commission. The Finance Department shall be responsible for ongoing disclosure to established national information repositories and for maintaining compliance with disclosure standards promulgated by state and national regulatory bodies.

LF&A 1/22/07 Item 3 8 of 14 APPENDIX A CASH FLOW PROJECTIONS & PERTINENT DEBT AND CAPITAL RATIOS

LF&A 1/22/07 Item 3 9 of 14 City of Dover Debt Management Policy Sample Financial Model Table 1 Projected Net Margins Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 2006 2007 2008 2009 2010 2011 Operating Revenue - Rate Revenue 50,000,000 51,500,000 53,045,000 54,636,400 56,275,500 57,963,800 Operating Revenue - Other 500,000 510,000 520,000 530,000 540,000 550,000 Total Revenue 50,500,000 52,010,000 53,565,000 55,166,400 56,815,500 58,513,800 Direct Operating Expenses (35,000,000) (36,050,000) (37,131,500) (38,245,445) (39,392,808) (40,574,593) Allocated Overheads (5,000,000) (5,150,000) (5,304,500) (5,463,635) (5,627,544) (5,796,370) Total Operating Expenses (40,000,000) (41,200,000) (42,436,000) (43,709,080) (45,020,352) (46,370,963) Operating Margin 10,500,000 10,810,000 11,129,000 11,457,320 11,795,148 12,142,837 Non-Oper. Rev. - Interest on Operating Funds 400,000 634,000 634,000 634,000 634,000 634,000 Operating Transfers - Out (5,700,000) (5,700,000) (4,285,200) (3,585,800) (3,693,000) (3,803,400) Margins Available For Debt Service 5,200,000 5,744,000 7,477,800 8,505,520 8,736,148 8,973,437 Interest for Long-Term Debt (914,000) (859,048) (1,599,500) (1,726,400) (1,617,400) (1,498,300) Cash From Operations 4,286,000 4,884,952 5,878,300 6,779,120 7,118,748 7,475,137 Non Cash Income/Loss on Investments - - - - - - Gain/Loss on Sale of Assets - - - - - - Debt Issue Cost Amort.-Outstanding Debt (110,000) (110,000) (110,000) (110,000) (110,000) (110,000) Debt Issue Cost Amort.-New Debt - - (25,000) (25,000) (25,000) Depreciation Expense (3,800,000) (4,164,400) (4,472,000) (4,846,900) (5,011,800) (5,019,200) Net Margins ($) 376,000 610,552 1,296,300 1,797,220 1,971,948 2,320,937 Debt Service Coverage Margins Avail. for Debt Service 5,200,000 5,744,000 7,477,800 8,505,520 8,736,148 8,973,437 Total Debt Service 2,768,614 2,589,048 3,379,500 4,171,300 4,157,500 4,160,100 Debt Service Coverage Ratio 1.88 2.22 2.21 2.04 2.10 2.16

LF&A 1/22/07 Item 3 10 of 14 City of Dover Debt Management Policy Sample Financial Model Table 2 Projected Cash Flows Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 2006 2007 2008 2009 2010 2011 Beginning Cash Balance Cash Balance as of July 1 $7,068,372 $1,344,732 $5,667,765 $8,030,565 $6,423,085 $10,001,932 Sources of Cash Sale of Bonds - - 15,000,000 - - - Cost of Bond Sales - - 500,000 - - - Net Bond Proceeds - - 14,500,000 - - - Transfers From Reserves and Grants 504,000 8,714,000 - 5,241,500 1,194,000 3,463,500 Sale of Investments 4,000,000 - - - - - Cash from Operations 4,286,000 4,884,952 5,878,300 6,779,120 7,118,748 7,475,137 Non-Oper. Rev. - Interest on Reserve Funds 621,600 1,144,924 953,700 991,900 821,900 807,000 Other Sources of Cash - - - - - - Total Sources of Cash $9,411,600 $14,743,876 $21,332,000 $13,012,520 $9,134,648 $11,745,637 Transfers To Reserves 2,315,000 840,000 0 0 0 - Plant Additions 3,802,958 6,705,919 16,235,500 11,183,200 2,193,800 9,143,800 Principal on Debt 1,855,000 1,730,000 1,780,000 2,444,900 2,540,100 2,661,800 Purchase of Investments 7,162,282 1,144,924 953,700 991,900 821,900 807,000 Total Cash Requirements $15,135,240 10,420,843 $18,969,200 $14,620,000 $5,555,800 $12,612,600 Ending Cash Balance Increase (Decrease) in Cash ($5,723,640) $4,323,033 $2,362,800 ($1,607,480) $3,578,848 ($866,963) Unaccounted for Variance Cash Balance as of June 30 $1,344,732 $5,667,765 $8,030,565 $6,423,085 $10,001,932 $9,134,969 Minimum General Reserves-5% of Revenue 2,525,000 2,600,500 2,678,250 2,758,320 2,840,775 2,925,690 Difference from Cash Reserve - Net Long/(Short) ($1,180,268) $3,067,265 $5,352,315 $3,664,765 $7,161,157 $6,209,279 Cash Available for Plant Additions 116,000 2,314,952 4,098,300 4,334,220 4,578,648 4,813,337

LF&A 1/22/07 Item 3 11 of 14 APPENDIX B LIST OF SERVICES TO BE PROVIDED BY FINANCE DIRECTOR • Maintain a database with all outstanding debt; • Attend meetings of the City Council or its committees relating to financial issues affecting the financing; • Use comparative bond pricing services or market indices as a benchmark in negotiated transactions; • Provide the Legislative and Finance Committee an evaluation of the final bond pricing results; • Attend competitive bid openings for issuance of debt to assist the City with verification of bids, ensuring compliance with financing terms and conditions and to recommend acceptance or rejection of bids; • Develop cash flow projections and pertinent debt and capital ratios for the current and the next four fiscal years; • Determine the available debt capacity; • Recommend to the Legislative and Finance Committee the manner of sale of debt, including a recommendation to use either fixed rate debt or variable rate debt; • Monitor opportunities to refund debt and recommend such refunding, as appropriate; • Provide for the timely payment of principal and interest on all debt; • Provide for and participate in the preparation of offering and disclosure documents; • Assure all repositories are provided the legally required information under Securities and Exchange Commission Rule 15c2-12, regarding continuing disclosure; • Provide for the timely distribution of pertinent information to the bond counsel, financial advisor, paying agent, auditor, underwriters and rating agency and other municipal market participants; • Provide post sale analysis; • Prepare and review bid procedures, including CUSIP subscription, escrow services; • Recommend investment of proceeds and reserves; • Assist in the review and analysis of state and federal legislation pertaining to the City’s financing programs; • Prepare and assist in the evaluations of RFPs for financial services as are considered appropriate by the City Council, including, but not limited to, the financial advisor, bond counsel, line of credit banks or liquidity facilities bank for variable rate bonds and trustees; • Seek out and evaluate proposals on new products and other financing ideas from underwriters and other professionals in the field of finance; • Maintain communications with credit rating agencies, as described in the section “Communications with Credit Rating Agencies”; • Provide other services as requested by the City Council.

LF&A 1/22/07 Item 3 12 of 14 APPENDIX C LIST OF SERVICES PROVIDED BY FINANCIAL ADVISOR • Recommend specific covenants, financing structure, indentures and terms, including call provisions; • Prepare and/or review preliminary and final official documents and all contracts and resolutions relating to the issuance of debt; • Prepare and review advertisements of sales; • Assist in preparation of information for rating agencies, investors and other municipal market participants; • Assist the City with any other financing matters, including setting up electronic bids, investing proceeds, handling escrow issues and administering the City’s program; • Attend meetings of the City as requested; • Attend competitive sales’ bid openings to assist in the verification of bids and assure compliance with the terms of terms and conditions, and recommend to the Director of Finance acceptance or rejection of the bids; • Advise the City regarding negotiated sales during the sales process so as to assure the coupon rates reflect current market rates; • Provide assistance in the preparation of RFPs for services related to the issuance of debt; • Provide post sales analysis, including an issue summary and Final Report; • Provide continuing service, including monitoring the outstanding obligations and the opportunities to refund, evaluating proposals on new products, and assisting in reviewing state and federal legislation.

LF&A 1/22/07 Item 3 13 of 14 APPENDIX D LIST OF SERVICES PROVIDED BY BOND COUNSEL • Render legal opinions regarding the validity and binding effect of the bonds, the source of payment and security for the bonds and the excludability of interest on the bonds from gross income for federal income tax purposes; • Prepare and review the documents necessary to authorize, issue, sell and deliver the bonds and to coordinate the authorization and execution of these documents including the Resolution; • Review all legal issues related to the structure of the bonds; • Prepare and review those sections of the offering documents to be disseminated in connection with the sale of the bonds; • Assist, as needed, the City in presenting information regarding legal issues pertinent to the bond rating agencies, investors, and other municipal market participants; • Participate in meetings relating to legal issues; • Prepare and/or contracts, as necessary, including bond purchase contracts, liquidity facility agreements, remarketing agreements, investment and trust agreements and other documents as is deemed appropriate by the City; • Prepare the official transcripts of the proceedings related to the sale of bonds • Assist in other legal matters relating to the issuance of the bonds; • Provide ongoing services including tax advice, regulatory efforts and rulings that pertain to the City, planning for continuing disclosure and RFPs for financial services relating to the issuance of bonds. GLOSSARY

LF&A 1/22/07 Item 3 14 of 14 Amortization – accounting procedure that gradually reduces the cost value of a limited life or intangible asset through periodic charges to income, or the reduction of debt by regular payments of interest and principal sufficient to pay off the debt by maturity. Arbitrage – profiting from differences in price when the same security, currency, or commodity is traded on two or more markets. An element of tax exempt debt. The City maintains bond reserves to provide assurance to bond holders of its ability to make its annual debt service payments. In doing so, the rate earned on the reserve accounts may at times exceed the rate being paid on the bonds. In these instances, the City will be subject to tax payments on the earnings that exceed the interest cost as determined by a licensed arbitrage calculator. Fixed Rate Debt - debt that pays interest based on a fixed coupon rate until maturity. Letter of Credit – instrument or document issued by a bank guaranteeing the payment of a customer’s drafts up to a stated amount for a specified period. It substitutes the bank’s credit for the buyer’s and eliminates the seller’s risk. Long-term Debt – Debt with maturities of greater than one year from date of issuance. Revenue Anticipation Notes – short-term debt issue of a municipal entity that is to be repaid out of anticipated revenues such as sales taxes. When the taxes are collected, the RAN is paid off. Interest from the note is usually tax-free to RAN holders. Short-term Debt – Debt with maturities less than one year from the date of issuance. Tax Anticipation Notes – short-term obligation of a state or municipal government to finance current expenditures pending receipt of expected tax payments. TAN debt evens out cash flow and is retired once corporate and individual tax revenues are received Trust Company – an organization usually combined with a commercial bank, which is engaged as trustee, fiduciary, or agent in the administration of trust funds, estates, custodial arrangements, stock transfer and registration, and other related services. Trust companies are regulated by State law. Underwriter – an investment banker, who, singly or a member of an underwriting group or syndicate, agrees to purchase a new issue of securities from an issuer and distribute to investors, making a profit on the underwriting spread. Variable Rate Debt - debt that pays interest based on a rate which is reset periodically

ACTION FORM PROCEEDING: Legislative, Finance & Administration Committee AGENDA ITEM NO.: 1/22/07 - 4 DEPARTMENT OF ORIGIN: Public Services DATE SUBMITTED: 1/12/07 PREPARED BY: Ann Marie Townshend, AICP, Director of Planning & Inspections Mark Nowak, GIS Coordinator SUBJECT: Evaluation of Bids – Purchase of ArcGIS Server REFERENCE: NA RELATED PROJECT: IT0602 APPROVALS: City Manager and Finance Director EXHIBITS: N/A EXPENDITURE REQUIRED: $38,450 AMOUNT BUDGETED: $50,000 * FUNDING SOURCE (Dept./Page in CIP & Budget): CIP, Page 136 TIMETABLE: ASAP RECOMMENDED ACTION: Recommend Approval of ArcGIS Server Purchase BACKGROUND AND ANALYSIS This expenditure includes the purchase of ArcGIS Server software, a Dell PowerEdge 1950 server, and installation services from ESRI. The software/server bundle is essential for the City to advance in GIS technology and infrastructure. ArcGIS Server can be leveraged to produce custom GIS applications and Web viewers to allow our GIS data (interactive maps) to be available to more people for viewing, looking up information and basic analysis. This is the latest version and replaces ArcIMS, ArcView Single Seat License referenced in the CIP The ArcGIS Server software, server and installation service bundle will be purchased through ESRI, a sole vendor for the bundle. According to the Purchasing Policy, Section 3.16: The provisions of this policy will not apply in cases where there is only one vendor providing the materials, equipment, supplies or construction. In these cases, advertising is not required. If the purchase is over $25,000 however, it must be presented to Council for approval. Sole vendors must be justified in writing to Central Services. Because ESRI is the sole vendor for the ArcGIS software, server and installation services bundle with the software, this purchase is not required to be bid. * $70,000 was allocated in the CIP for GIS implementation. This was ultimately cut back to $50,000. The ArcGIS Server purchase is one component of this CIP item.