LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE
The Legislative, Finance, and Administration Committee meeting was held on November 10, 2008 at 6:00 p.m. with Chairman Slavin presiding. Members present were Mr. McGlumphy, Mr. Salters, Mr. Shevock, and Dr. Jones. Other members of Council present were Mr. Leary, Mr. McGiffin, Mrs. Williams, Mr. Ruane, Council President Hogan, and Mayor Carey.
AGENDA ADDITIONS/DELETIONS
Mr. Salters moved for approval of the agenda, seconded by Mr. McGlumphy and unanimously carried.
City of Dover Identity Theft Prevention Policy
Mrs. Tieman, Senior City Administrator, reviewed a Presentation of the City of Dover Identity Theft Prevention Policy and explained that the Fair and Accurate Credit Transactions Act of 2003 (FACT Act of 2003) was passed to set standards for guarding customer information. It took effect January 1, 2008; however, entities covered by the rule had until November 1, 2008, to implement programs to comply with the rule. The rule requires creditors (which includes utilities or any entity that would process payments and establish ongoing accounts) to establish identity theft prevention programs for covered accounts.
Mrs. Tieman explained that the FACT Act requires the City to develop a privacy policy; identify red flags; perform a needs assessment; document choices for mitigation; use best practices for record disposal; document employee training; document employee screening; form a privacy committee; document procedures for handling a breach in security; document procedures for handling address discrepancies; document procedures for handling a customer’s request for information; document internal and external IT security procedures; document complaints; perform yearly assessments; and compile annual reports for internal purposes. As the City proceeds through these tasks, Mrs. Tieman indicated that the current policy may need to be revised. Staff recommended approval of the Identity Theft Prevention Policy.
Mrs. Tieman stated that the Federal Trade Commission (FTC) enforces the FACT Act and punitive fines are expected to represent the degree of negligence and total loss; therefore, the City must demonstrate “reasonable security” of our customer’s information. She stated that although many of the procedures are already followed by some departments, staff felt that such a policy should be applicable to all departments, explaining that if someone’s identity is stolen and there is not an adopted policy, the City could be held responsible.
Mrs. Tieman advised members that due to mis-communication, the FCC has granted an extension for enforcement of the FACT Act until May 1, 2009. She explained that the policy presented for the City of Dover consists of the policy adopted by DEMEC and that it is staff’s intention to revise the City’s policy to be more specific to the City of Dover.
Mr. McGlumphy moved to recommend acceptance of the draft City of Dover Identity Theft Prevention Policy, seconded by Mr. Salters and unanimously carried.
Charter Review - Amended Scope
During the October 6, 2008 Council Workshop, members reviewed the City’s Strategic Objectives for Fiscal Year 2008-2009. During their discussion, Mr. Ruane had questioned if members felt that Charter Amendments should be included. Mr. Slavin explained the struggles that the Legislative, Finance, and Administration Committee has had with the Charter Review and suggested that it would be helpful if members provided the committee direction regarding specific issues they feel warrant review. It was recommended that the Legislative, Finance, and Administration Committee continue with the Charter Review with primary attention being focused on those recommendations contained in the IAAO Report and those recommendations necessary as a result of the Comprehensive Plan.
Mr. Slavin suggested a change in scope for the review of the City Charter that would review only those items brought by Council for consideration for the upcoming legislative year, to be conducted annually. Should members wish to proceed in this manner, he requested that all Council identify those items they wish to have considered to be placed on the committee’s agenda in January/February of each year.
Mr. Salters moved to recommend approval of the amended scope for the Charter Review for members of Council to identify those items they wish to have considered to be placed on the committee’s agenda in January/February of each year. The motion was seconded by Mr. Shevock and unanimously carried.
Draft Comprehensive Annual Financial Report (CAFR)
Mrs. Mitchell, Controller/Treasurer, provided members a Draft of the City’s Comprehensive Annual Financial Report for the year ending June 30, 2008, which has also been provided to the City’s audit firm, Faw, Casson, & Company, LLC. She stated that the auditors have not had the opportunity to review the financial statements or any recommended changes. She indicated that the final CAFR should be available in January 2009 and suggested a Council Workshop to allow for a thorough review. Mr. Slavin requested that the civilian members of the Legislative, Finance, and Administration Committee be invited to attend the workshop session.
Mrs. Mitchell provided a broad overview of the CAFR and explanations to major highlights.
Mr. Ruane noted that staff had occasionally included benchmarked areas throughout the document; however, benchmarks have not been included in other areas such as property tax revenue, costs of public safety, etc. He encouraged additional comparisons of other governments to include both growth and comparisons. Responding, Mrs. Mitchell suggested that it would be more appropriate to include such information in the budget. She advised members that both the CAFR and Budget is a part of the Government Finance Officers Association (GFOA) Excellence Awards process. The GFOA provided the City with a set of guidelines to be utilized for each of these documents. She assured members that each document is formulated based on those guidelines and that staff typically does not deter from the guidelines. Mrs. Mitchell indicated that staff includes extra supplementary information that is not required for disclosure purposes and suggested the possibility of including such information with that section of the CAFR.
Mrs. Mitchell advised members that the Director of Planning and Inspections provided the information regarding the local economy section since her department is more familiar with this information.
Mr. Salters moved to recommend acceptance of the Draft CAFR, seconded by Mr. McGlumphy and unanimously carried.
Power Supply Hedges - Letter of Credit
Mrs. Mitchell, Controller/Treasurer, reviewed a Presentation of Power Supply Hedges - Letter of Credit (Attachment #1). She advised members that the EEI Master Agreement establishes the financial terms, including the posting of security, in the event that a contract’s value exceeds a certain amount. The purpose of the clause is to provide financial security to either party in the event that a contract is overly beneficial or detrimental to the parties in order to dissuade an intentional breach or default. The EEI Master Agreement form that the City has executed with counter-parties allows cash or a letter of credit as collateral.
Mrs. Mitchell stated that a Letter of Credit will result in the City paying legal and bank fees each time one is issued or renewed. When cash collateral is given, it is held by the counter-party that has demanded the financial security. Unless the parties specifically agree, it does not have to be held in a qualified institution or with a qualified custodian.
Mrs. Mitchell advised members that the City has requested PACE to discuss with our counter-parties whether or not it would be acceptable for the City to establish an escrow account using reserve funds that would be held at the City’s banking institution, rather than a Letter of Credit. PACE is exploring this with the counter-parties and Mr. Kirk Betts, and, together, they will draft the appropriate terms in the Collateral Annex to the EEI Master Agreement to permit the type of escrow account described as an alternative to the Letter of Credit. Mrs. Mitchell stated that the escrow account would be held in the counter-party’s name and the contractual rights to draw on the account will essentially be the same as the current EEI Master Agreement. The Collateral Annex establishes clearer processes for managing collateral.
Staff recommended that the City Manager be authorized to sign the Collateral Annex to the EEI Master Agreement to authorize the Controller/Treasurer to post cash collateral when required by the terms of the EEI Master Agreement in an interest bearing Escrow Account using Reserve Funds. To provide City Council with notification of execution of the Collateral Annex and establishment of Escrow Accounts and related balances.
Mr. Salters moved to recommend approval of staff’s recommendation, seconded by Mr. McGlumphy and unanimously carried.
Mr. Salters moved for adjournment, seconded by Mr. Shevock and unanimously carried.
Meeting Adjourned at 6:55 P.M.
Respectfully submitted,
Timothy A. Slavin
Chairman
TAS/AC/TM/jg
S:ClerksOfficeAgendas&MinutesCommittee-Minutes200811-10-2008 LF&A.wpd
Attachment (to original and file copy)
Attachment #1 - Presentation of Power Supply Hedges - Letter of Credit