SPECIAL
LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE
A Special Legislative, Finance, and Administration Committee meeting was held on March 31, 2008 at 5:00 p.m. with Chairman Slavin presiding. Members present were Mr. McGlumphy, Mr. Salters, Dr. Jones (departed at 6:07 p.m.), and Mr. Shevock. Other members of Council present were Mr. Leary (arrived at 5:06 p.m.), Mr. McGiffin, Mr. Ruane, and Mayor Carey.
AGENDA ADDITIONS/DELETIONS
Mr. Slavin noted his intention to mention, during item #7 - Donation to Central Delaware Economic Development Council, the Air Passenger Travel Study and requested that item #7 be moved to be considered following item #4 - Recommendations of Tax Exemption Review Committee.
Mr. McGlumphy moved for approval of the agenda, as amended, seconded by Mr. Salters and unanimously carried.
Auditor’s Correspondence to Legislative, Finance, and Administration Committee (Audit Committee)
Mrs. Mitchell, Controller/Treasurer, advised members that at the completion of each audit, the Auditor is required to submit a Management Letter to the Council and an Audit Committee Report regarding their review of Internal Controls. While both letters are dated the date of the completion of the annual report, she stated that they are not issued until the A-133 Audit (Federal & State Grants) audit is completed. She noted that the A-133 Audit has to be completed and submitted to the Federal Clearing House by March 31st. Staff provided members with the reports for discussion and acceptance, as follows:
Standard Management Letter
Mrs. Mitchell reported that the audited Comprehensive Annual Financial Report (CAFR) and the A-133 Audit came back with no material findings and a clean opinion. She indicated that a complete copy of the A-133 Report is on file with the Finance Department and is available upon request.
Staff recommended acceptance of the Standard Management Letter.
Mr. Shevock moved to recommend approval of staff’s recommendation, seconded by Mr. McGlumphy and unanimously carried.
Audit Committee Report
Mrs. Mitchell explained that the Audit Committee Report addresses the auditor’s consideration over the City’s internal controls. She noted that there were two (2) matters they felt deserve consideration, which she reviewed as follows:
1.The Electric Revenue Fund, at the time of the audit, had an increase in inventory not used during the past 36 months of $660,000. The City’s current reserve balance is $276,629 and the current obsolete/non-moving inventory is $627,617. In 2003, the City implemented the inventory reserve to write off obsolete and damaged inventory. The City has appropriated a total of $350,000 to provide for any inventory disposals. To date, $73,371 has been written off. The auditor’s concern stems from the dollar amount of obsolete/non-moving inventory as compared to the City’s reserve balance. Mrs. Mitchell stated that she will be recommending that the City increase the annual appropriation to $175,000 in the FY09 Budget in order to bring the reserve balance up to a more appropriate level over the next few years. At the same time, it has been communicated to staff that any sales of obsolete inventory should also get credited to offset the amounts written off. (i.e. tree wire).
2.The Police Department submitted a Committee Action Form for its HVAC equipment without obtaining quotes or bids. The prior equipment was Trane, which had a sole vendor for maintenance. The new equipment being purchased and installed (not maintenance) was Honeywell, which are universally available, less expensive, and extremely user friendly. The auditor’s believe that the new equipment did not justify a continuity of service bid exception due to a vendor preference. Mrs. Mitchell advised members that this matter has been discussed with the Police Department.
Mrs. Mitchell advised members that these types of matters should be resolved by providing training to department heads by the Finance Department and that this training was scheduled to be accomplished this fiscal year; however, due to personnel matters, the training may not be accomplished until the next fiscal year.
Staff recommended acceptance of the Audit Committee Report.
Mr. McGlumphy suggested that when a sole vendor item is presented to Council, that staff color code the action form to assist in bringing the matter to Council’s attention.
Responding to Mr. Ruane regarding the inventory matter, Mr. DePrima explained that the City’s goal was to reduce the amount of inventory over a three (3) year period. This information is provided to members in the City Manager’s Monthly Report. Relative to the Electric Department, he stated that items that have been inventoried for more than three (3) years does not necessarily indicate that the item is too old or obsolete, explaining that many items are maintained in case of storms or for purposes of installation. Mrs. Mitchell also advised members that the Central Services Manager distributes a list of inventory items to the departments requesting them to indicate those items that are no longer usable and that he is advised of any exceptions such as transformers.
Mr. Shevock moved to recommend approval of staff’s recommendation, seconded by Mr. McGlumphy and unanimously carried.
Reserve Balance Analysis
Mrs. Mitchell, Controller/Treasurer, advised members that the City of Dover has established, over time, Budget Balance and Reserve Accounts in order to manage cash flow, provide for contingencies and capital asset replacements or projects. The detailed requirements for the reserve balances are outlined in the City of Dover Financial Policies. In an effort to update members on these accounts, staff provided an analysis that lists each account, their current balance, and a summary of the requirements from the City’s policy.
Mrs. Mitchell noted that staff will be submitting recommended amendments to the Financial Policies in the near future.
Referring to the Capital Asset Project Reserve, Mr. Ruane questioned the reserve being under-funded and the concept of its funding by non-recurring revenues. Responding, Mrs. Mitchell explained that it must be determined if the transfer tax from certain sales (such as apartment complexes) are considered non-recurring revenues or regular transfer tax revenue. Mr. Ruane suggested that staff be tasked with developing a remedy for the Capital Asset Project Reserve with some identifiable non-reoccurring revenue, otherwise, he felt that the funds necessary will never be acquired.
Responding, Mr. DePrima reminded members that when the Capital Asset Project Reserve goal of $500,000 was established, it pre-dated the efforts to build the Library Reserve. He noted that the City has been very successful in building the Library Reserve and that once the Library Project is finalized, the focus can be returned to the Capital Asset Project Reserve. He also reminded members that the funds included in the Capital Asset Project Reserve is not earmarked for a particular project, explaining that the concept was to build a fund for future replacement of major assets, such as buildings. Mr. DePrima reiterated that the City has been successful in using various mechanisms to build the Library Reserve that would have otherwise been used to build the Capital Asset Project Reserve.
Mr. McGlumphy requested that Mrs. Mitchell provide members with a complete analysis of unaccountable money that has been received through this fiscal year and where these monies were credited.
Review of Investment Policy
Members were provided with the City’s Investment Policy. Mrs. Mitchell, Controller/Treasurer, reminded members that in accordance with Section 15, the policy is to be reviewed at least once every two (2) years by the committee, which is charged with considering the existing policy and referring any recommendations to modify the policy to City Council for action.
Staff recommended no changes to the Policy at this time.
Mr. Salters moved to recommend approval of staff’s recommendation, seconded by Dr. Jones and unanimously carried.
Recommendations of Tax Exemption Review Committee
During their Regular Meeting of August 27, 2007, City Council approved the appointment of an ad-hoc committee to review the substance and procedure of the City of Dover property tax exemption. Mr. McGiffin, Chairman of the Tax Exemption Review Ad-Hoc Committee, advised members that the Committee completed its review and concluded that the following recommendations would best address the needs of Dover citizens:
1.Individuals who are determined to be disabled under the law applicable to the Social Security Administration are qualified to apply for the property tax exemption (amendment to §102-183(b) of the Dover Code).
2.Income received by an individual from Federal Civil Service Retirement System shall be excluded from the income counted for purposes of determining eligibility for the property tax exemption (amendment to §102-183(b)(3) of the Dover Code).
3.The income limit applicable to the property tax exemption shall be adjusted to reflect the federal Cost of Living Adjustments (COLA) for the two years that have transpired since the present levels were set. The COLA for 2006 was 3.3%, and the COLA for 2007 was 2.3%. The individual income limit will be adjusted to $15,851, and for a couple $21,192. The income limits shall increase at the same rate as any COLA used by the federal Social Security Administration and effective before the tax exemption application deadline (amendment to §102-183(b)(1) & (2) of the Dover Code).
Members were provided proposed ordinance amendments to Chapter 102 - Taxation, of the Dover Code, which included the recommendations of the Tax Exemption Review Committee, for their review and recommendation to City Council.
Mr. Salters moved to recommend approval of the recommendations of the Tax Exemption Review Committee and adoption of the proposed ordinance amendments to Chapter 102 - Taxation, of the Dover Code (Attachment #1). The motion was seconded by Mr. Shevock and unanimously carried.
Donation to Central Delaware Economic Development Council
Members considered a request of the Central Delaware Economic Development Council (CDEDC) for a donation, in the amount of $16,000 to assist with attracting new employers and job opportunities. It was noted that since 1999, the City has assisted the CDEDC with this endeavor, and that during the past fiscal year a donation was provided in the amount of $16,000.
Mr. Dan Wolfensberger, Director of the CDEDC, reviewed the cost/benefit analysis of the City of Dover support of the CDEDC over the last 10 years and provided members with details regarding the Program of Work approved for 2008 for the CDEDC and Budget (Attachment #2).
Responding to Mr. McGlumphy, Mr. Wolfensberger stated his opinion that downtown Dover has potential and that there is a need for it to be unique and marketed to announce its existence. He also suggested that a person dedicated to locating companies and encouraging them to locate in the downtown area is essential.
Mr. McGlumphy reminded Mr. Wolfensberger of a report he requested in 2004 regarding the number of new companies for the City of Dover since 1998. He requested that this report be updated and provided to members.
Mr. Salters moved to recommend approval of the request of the Central Delaware Economic Development Council (CDEDC) for a donation in the amount of $16,000, seconded by Dr. Jones.
Responding to Mr. McGlumphy regarding the monies appropriated for economic development, Mr. DePrima explained that the current balance for economic development in the Mayor’s budget is approximately $18,000 and that an additional $5,000 is budgeted for marketing (for economic development). He alluded to a recent request for funding assistance, in the amount of $7,500, for the Air Passenger Travel Study and advised members that there has not been a decision in this regard. Should Council wish to provide funding assistance, he stated that the $7,500 would also be provided from the City’s economic development budget, which would leave a balance in the amount of $10,500.
Mr. Ruane noted that the monies contributed to the CDEDC is not earmarked and questioned the possibility of stipulating that the balance be provided with the understanding that the amount needed for the Air Passenger Travel Study would be provided from this money. At the request of Mr. Ruane, Mr. DePrima explained that $20,000 has been budgeted for economic development and that $5,000 has been budgeted for economic development marketing.
In response to Mr. Slavin, Mayor Carey indicated his concurrence with the contribution to CDEDC in the amount of $16,000. He noted that the contribution requested for the Air Passenger Travel Study, in the amount of $7,500, is to be shared by Kent County and other organizations, such as the Chamber of Commerce, and indicated no objection to the City contributing their portion.
The motion recommending approval of the request of the Central Delaware Economic Development Council (CDEDC) for a donation in the amount of $16,000 was unanimously carried.
Mr. McGlumphy moved to recommend that the City of Dover contribute an amount up to $7,500 to be allocated for the Air Passenger Travel Study, with the stipulation that other entities become partners. The motion was seconded by Mr. Salters.
Mr. Salters felt that other municipalities such as Smyrna and Milford should share in this contribution since they too could benefit from the study, which would help alleviate the burden for the City of Dover. Responding, it was Mr. DePrima’s opinion that the CDEDC would be responsible for preparing the Memorandum of Understanding and obtaining contributors for the study.
The motion recommending that the City of Dover contribute an amount up to $7,500 to be allocated for the Air Passenger Travel Study, with the stipulation that other entities become partners, was unanimously carried.
Proposed Ordinances - Downtown Dover Partnership
Mrs. Townshend, Director of Planning and Inspections, provided members with a draft ordinance which would abolish the Parking Authority as it currently exists, officially form the Downtown Dover Partnership, and make the Partnership the beneficiary of the contribution for the downtown incentives (applicants receiving the incentives must contribute 10% of the value of the incentives to the Partnership). She explained that the proposed amendments are a part of a number of steps necessary to consolidate the Downtown Dover Development Corporation, Parking Authority, and Main Street Dover into one organization, the Downtown Dover Partnership. She reminded members that the consolidation of these organizations is a key strategy in moving forward with revitalization of downtown.
Mrs. Townshend noted an error in the synopsis and advised members that “Development Corporation” in the first sentence should be replaced with “Partnership”. In addition, she stated that the ordinance should include an effective date of July 1, 2008. She assured members that these corrections would be made when the ordinances are presented to City Council for a First Reading.
Staff recommended adoption of the proposed ordinances amending Chapter 106 - Traffic and Vehicles, and Appendix C - Downtown Redevelopment, Article II - Definitions and Article III - Eligibility, of the Dover Code.
Responding to Mr. Ruane’s concerns regarding the elimination of Division 5 - Parking Authority of the Dover Code, Mrs. Townshend stated that due to the discussions that occurred in the development of the partnership concept, the City Solicitor’s opinion was requested. She assured members that according to Deputy City Solicitor Pepper, the powers granted to the Parking Authority under State Statutes can be assumed by the Partnership and that there will be no loss of power.
Concurring, Mr. DePrima stated that the new organization, Downtown Dover Partnership, will be empowered with the same responsibilities as the Parking Authority with the exception of the creation of parking tax districts. Since such districts have never been considered, he stated that there were no concerns with the elimination of this power. He indicated that there are some condemnation powers that would not be provided to the Partnership and that if a condemnation is ever necessary, it would be exercised through the City.
Relative to the creation of the new partnership, Mr. Salters relayed concern with the elimination of Main Street Dover.
Responding to Mr. Ruane, Mrs. Townshend advised members that there are no further Code amendments; however, she stated that there will be new By-Laws, Articles of Incorporation, budgets, etc. required as a result of the new Partnership. Mr. Ruane requested that when the ordinances are presented to Council, the entire content of those sections of the Code be provided to members for clarification of the proposed amendments.
Mr. McGlumphy moved to recommend adoption of the proposed ordinances amending Chapter 106 - Traffic and Vehicles, and Appendix C - Downtown Redevelopment, Article II - Definitions and Article III - Eligibility, of the Dover Code (Attachment #3). The motion was seconded by Mr. Shevock and unanimously carried (Dr. Jones absent).
Donation of $10,000 for Vietnam War Memorial
Mayor Carey provided members with a letter received from Mr. George Chabbott, President/Broker of Chabbott Petrosky Commercial Realtors, Ltd., requesting a donation in the amount of $10,000 to $60,000+/- for the purpose of building a monument to honor local service members killed and/or missing in action in Vietnam. He noted that Mr. Chabbott provided a letter he received from the Vietnam Association of America, Kent County Chapter 850, explaining that they recently received a land donation from Kent County, located at the southwesterly corner of the intersection of South Little Creek Road and Levy Court Drive, which will be used for building the monument.
For reference purposes, members were also provided with the City’s Community Leader and Organization Recognition Policy.
In discussing the request with the City Manager and consideration of the City’s policies, Mayor Carey suggested that the City provide in-kind services, such as assisting with lighting for the monument. Mr. DePrima stated that the costs for the installation of conduit and electric could be absorbed through the City’s street lighting expenses. It was noted that the materials for the lighting is estimated at $6,500.
Mr. Salters moved to recommend support of the Vietnam War Memorial with in-kind contribution not to exceed $6,500 within the policies of the City, seconded by Mr. Shevock.
Referring to Section II, Paragraph C, of the Community Leader and Organization Recognition Policy, Mr. McGlumphy felt that the request for the Vietnam War Memorial should be considered an exception and suggested that members approve a donation in the amount of $10,000 as requested.
Mr. Salters moved that the motion be amended by striking $6,500 and inserting $10,000 in its place, seconded by Mr. Shevock.
Mr. Ruane referred to Section V of the Policy and suggested that the original motion better adheres to the policy, noting that the purpose of the policy was to provide for a strict interpretation to avoid the City being inundated with these types of requests.
Mr. McGlumphy stated his feeling that the request for the Vietnam War Memorial is an exception, explaining that the City of Dover is a military town and that $10,000 is minimal to help support a monument to honor those who lost their lives in Vietnam.
The motion to amend the motion by striking $6,500 and inserting $10,000 in its place was unanimously carried.
The motion to recommend support of the Vietnam War Memorial with in-kind contribution not to exceed $10,000 within the policies of the City was unanimously carried.
Responding to Mr. Ruane, Mr. Slavin indicated that when the committee’s recommendation is presented to Council, a funding source would be identified.
Mr. McGlumphy moved for adjournment, seconded by Mr. Salters and unanimously carried.
Meeting Adjourned at 6:31 P.M.
Respectfully submitted,
Timothy A. Slavin
Chairman
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Attachments
Attachment #1 - Proposed Ordinance Amendments -Chapter 102 - Taxation
Attachment #2 - Cost/Benefit Analysis of the City of Dover’s Support of the CDEDC, Program of Work Approved for 2008 for the CDEDC and Budget
Attachment #3 - Proposed Ordinance Amendments -Chapter 106 - Traffic and Vehicles, and Appendix C - Downtown Redevelopment, Article II - Definitions and Article III - Eligibility