COUNCIL COMMITTEES
The Council Committees Meeting was held on October 28, 2002, at 5:30 p.m., with Council President Carey presiding. Members of Council present were Mr. Ritter, Mr. Pitts, Mrs. Williams, Mr. Truitt, Mr. McGlumphy, Mr. Speed, Mr. Salters, Mr. Ruane, and Mayor Hutchison.
AGENDA ADDITIONS/DELETIONS
Mr. McGlumphy moved for approval of the agenda, seconded by Mr. Speed and unanimously carried.
LEGISLATIVE AND FINANCE COMMITTEE
The Legislative and Finance Committee met with Chairman Salters presiding. Members present were Mrs. Williams, Mr. McGlumphy, Mrs. Street, and Mr. Shelton.
Proposed Ordinance - Repair Assessment for Property Located at 128 Spruance Road, owned by Francis A. Winsley
On April 22, 2002, City Council declared the structure located at 128 Spruance Road, owned by Francis A. Winsley, to be a dangerous building and ordered that the property be repaired. Since the owner did not take the necessary action, the City hired a contractor to make the necessary repairs and, as a result, these costs have been assessed and a lien has been placed on the property. As a reminder, the property consists of a two-story townhouse which fell into disrepair as a result of a fire that occurred. Since the subject dwelling unit is an interior unit townhouse, demolition was an impractical solution and, therefore, staff was authorized to have the exterior of the building rehabilitated to minimum code standards.
According to our demolition procedure, one (1) of three (3) actions will occur: 1) owner pays the bill in full; 2) owner abandons property (notice is then sent to City Solicitor for processing property for Sheriff’s Sale); or 3) owner requests to make payments. In all cases, a lien is immediately placed on the property.
Mrs. Green, City Clerk, advised members that, upon receipt of the repair bill from the City, Mr. Winsley contacted the Administrative Services Department and requested the opportunity to make monthly payments in the amount of $500. According to the demolition procedure, Council must adopt an ordinance to assess the property with an extended payment schedule and set an interest rate. In 1993, Council discussed the City’s special assessment liens procedure and approved a schedule for payback periods to be used as a guideline for future ordinances, which included demolitions (repairs). It was felt that a three (3) year payback period would be appropriate for demolitions (repairs). It was also recommended that the property owners be required to pay interest at the legal rate established by 6 Del. C. §2301, which will be provided by the City’s Finance Director/Treasurer.
Members considered a proposed assessment ordinance, which indicated that the assessment, in the amount of $8,344.51, would be paid within a three (3) year period and levied at the rate of 6.25% per annum on the unpaid balance, for a total monthly payment of $254.80. Considering that Mr. Winsley had requested a monthly payment in the amount of $500, Mrs. Green provided members with several different payback period scenarios for consideration. Should members wish to offer a payback period other than three (3) years, Mrs. Green indicated that paragraph 3 of the proposed ordinance will be amended accordingly.
Mr. Salters felt that, since Mr. Winsley has agreed to pay $500 per month, the payback period should be set at 1½ years to provide for a monthly payment in the amount of $486.86.
Mr. Salters moved to recommend adoption of an ordinance to assess Mr. Francis A. Winsley, the owner of 128 Spruance Road, an amount of $8,344.51 for repair costs, to be paid within a 1½ (one and one half) year period, at an interest rate of 6.25% (Attachment #1). The motion was seconded by Mr. McGlumphy and unanimously carried.
DELINQUENT TAX PAYMENTS
During the Regular Council Meeting of October 22, 2001, Mr. Ruane expressed concern with the amount of delinquent tax payments owed to the City. He advised members that for the 1998 tax year, there were four (4) outstanding accounts in the amount of $3,600; for the 1999 tax year, there were 50 outstanding accounts in the amount of $9,000; for the 2000 tax year, there were 331 outstanding accounts in the amount of $72,000; and in the 2001 tax year, as of October 4th, there were 1,200 outstanding accounts in the amount of $395,236. Mr. Ruane indicated that the outstanding accounts are of reputable citizens and businesses, not necessarily those that are considered “less fortunate”. Feeling that some action should be taken to address this matter, he suggested the possibility of posting delinquent accounts at City Hall for public inspection and/or the possibility of the Legislative and Finance Committee considering an increase in the delinquency interest rate, which is currently set at 1½%. Noting that the City does not pursue legal action until an account is two (2) years delinquent, he suggested the possibility of pursuing legal action after one (1) year. As a result of the above discussion, the following items are being presented for consideration:
Consideration of Increase in Interest Rate from 1½% to 2% (Charter Amendment)
Mr. Cooper, Tax Assessor, informed members that the current interest rate charged on unpaid tax balances is 1½% or 18% annually. An increase to 2% would result in an annual interest rate of 24%. He noted that some municipalities charge a flat rate of 6% with a 2% per month charge.
Since the proposal would require a Charter amendment, Mr. Speed requested that the Mayor and/or Council President contact the General Assembly delegation to garner support for the proposed increase.
Responding to Mrs. Williams, Mr. Cooper stated that 98% of the taxes billed in July 2002 have been paid. There are approximately 100 delinquent accounts which will be prepared for sale by the Sheriff. Mr. Ruane stated that the outstanding amount for delinquent accounts is $446,000. He noted that 156 accounts, totaling $145,000, have been outstanding for two (2) years, and some accounts have been delinquent for five (5) years. Mr. Ruane indicated that many of the delinquent accounts are for multiple property owners in the development industry and people that would be expected to have the means to pay their taxes.
Mrs. Street questioned why legal action has not been pursued on the older accounts. Mr. Cooper indicated that he is in the process of taking action on those accounts.
Mr. McGlumphy moved to recommend approval of staff’s recommendation to adopt a resolution (Attachment #2) requesting the General Assembly to amend Section 49 of the Charter of the City of Dover to increase the penalty on delinquent tax accounts from 1½% to 2%. The motion was seconded by Mrs. Williams and unanimously carried.
Posting of Delinquent Accounts for Public Inspections
In an effort to encourage the payment of delinquent accounts, Mr. Ruane suggested posting the list of delinquent accounts for public inspection. It was noted that the list is currently available in the tax office for review, however, it is not posted at any other location.
Some members indicated that this action may provide the most effective means of encouraging delinquent taxpayers to pay their taxes. Other members expressed concern that posting the names would reflect negatively on the City and publicly humiliate citizens.
Mr. DePrima stated that some places have a legal requirement to publish a notice indicating that action is being taken, with the notice including the name of the property owner and the amount owed, prior to selling the property at a Sheriff’s sale.
Mr. Truitt suggested posting only the names of taxpayers who are one (1) year behind in their taxes and who are not attempting to make arrangements for payment. Mr. McGlumphy suggested that the property owners whose accounts are more than one (1) year in arrears be contacted to try to make arrangements prior to posting their names.
Mr. McGlumphy moved to recommend approval of the recommendation to post the listing of delinquent accounts for publication after one year of non-payment. The motion was seconded by Mrs. Street and carried with three (3) yes and two (2) no (Mr. Salters and Mr. Shelton).
Pursuing Legal Action after One (1) Year Delinquent (currently at 2 years)
Mr. Cooper explained that tax bills are due by July 31st of each year. On July 31st, if a property owner has failed to pay the previous and current years’ tax bills, although it is actually one (1) year and one (1) month, they are considered two (2) years delinquent and legal proceedings are initiated. Mr. Cooper noted that there is currently no written policy regarding delinquent taxes.
Responding to Mrs. Williams, Mr. Cooper stated that the litigation process takes approximately one (1) year and seven (7) months to take a property to Sheriff’s sale. Once the property is sold, the original owner has 60 days to pay the taxes, with interest. If the taxes are not paid, ownership transfers to the buyer.
Mr. Salters suggested that the City Assessor develop a written policy for further review and recommendation to City Council. In order to develop a policy, Mrs. Williams suggested that the City Assessor be provided guidance from members.
Mrs. Williams moved to recommend approval of staff’s recommendation to reduce the amount of time to pursue legal action in cases of delinquent taxes from two ( 2) years to one (1) year. The motion was seconded by Mr. McGlumphy and carried with four (4) yes and one (1) no (Mr. Salters).
Proposed Ordinance Amendment - Chapter 1, General Provisions - Section 1-13, Denial of Permits or Approvals for Failure to Comply with Requirements for Payment, Actions, or Filings (Requiring Property Owners to be current on Property Taxes before being issued an Application for Building Permits, Zoning Changes, Subdivision Approvals, or any other use of such Real Property)
As directed by City Council, Mr. Cooper requested Deputy City Solicitor Pepper to prepare an ordinance amendment that would require property owners to be current on their property tax payments before being issued application for building permits, zoning changes, subdivision approvals, or any other use of such real property. Members of the local real estate community, along with the Chamber of Commerce, were provided a copy of the draft amendment for their consideration and comments.
Responding to Mr. Shelton, Mr. Salters indicated his feeling that an owner of multiple properties, including residential builders, should be current on all property taxes prior to being issued permits. Mr. Ritter suggested that rental dwelling permits should also be withheld for non-payment of taxes. Mr. DePrima noted that the ordinance provides each department head the ability to grant or deny the issuance of permits or other indication of approval.
Mr. Speed questioned whether or not five (5) working days would be sufficient time for staff to determine if the property taxes have been paid. Mr. DePrima stated that they should be able to determine very quickly if a property owner is current with their taxes. He noted that some permits take longer than five (5) days to review; however, the applicant should be notified within the five (5) day period if the permit will be withheld for non-payment of taxes. Mr. DePrima suggested amending the proposed ordinance to indicate, in the case of failure to obtain approval within five (5) working days, that the applicant shall have the right to have their application reviewed without consideration of the requirements of the section rather than automatically granting the approval.
Responding to Mr. Speed, Mr. DePrima indicated that the Dover Code defines an owner as “any person who alone or jointly or severally with others has: (a) Legal title to any dwelling or dwelling unit, with or without accompanying actual possession thereof; or (b) Charge, care or control of any dwelling or dwelling unit as owner or agent of the owner or as executor, executrix, administrator, administratrix, trustee or guardian of the estate of the owner.”
Mr. Carey noted the Inspections Department is currently running a test program which enables them to check the payment status of an applicant’s property taxes. If taxes are owed, they direct the applicant to the Tax Office. Ms. Melson indicated that, while checking for one property is relatively simple, it will be more difficult for staff to readily assess a situation involving more than one property or multiple property owners.
Mr. DePrima expressed concern with the structural placement of the ordinance, as well as the title. He suggested changing the title to “Denial of Permits or Approvals for Failure to Comply with Requirements for Payment, Actions, or Filings” and placing it in Chapter 1 - General Provisions.
Mrs. Williams moved to recommend approval, without delay, of the proposed ordinance, with amendments suggested by the City Manager (Attachment #3). The motion was seconded by Mr. McGlumphy and unanimously carried.
Assessment Increase
During the recent property reassessment it was suggested that, for ease of understanding, the basis for the tax calculation be changed from sixty percent (60%) of the appraised value to one hundred (100%) of the appraised value with a corresponding decrease in the tax rate from $0.00685 to $0.00411. Mr. Cooper emphasized that this change will not change the property tax, only the method of calculation. He noted that he contacted other municipalities and found that several, including Seaford and Newark, use the proposed method for determining property taxes.
Mr. McGlumphy moved to recommend approval of the revision in the property tax calculation, as recommended by staff. The motion was seconded by Mrs. Williams and unanimously carried.
Consideration of Grant/Increase in Authorized Strength - Police Department
The Dover Police Department has been awarded a $300,000 COPS Grant for four (4) additional police officers. The COPS Grant requires that the City maintain the officers at the conclusion of the three (3) year grant period; therefore, staff is requesting that the authorized strength be increased from 81 to 85. Members were provided information on the costs associated with adding the officers, including future increases, pension contributions, health insurance, and workman’s compensation, and a comparison of the authorized strength of other departments. Chief Horvath noted that the grant will save the City $150,000 in the first year, $100,000 in the second year, and $50,000 in the third year.
Mr. McGlumphy reminded members that, due to the cost factors associated with salaries and benefits in all departments, they will have to prioritize where money will be spent. He stated that he supports the proposal, feeling that there are enforcement issues which need to be addressed.
Mr. Pitts, noting that taxes have not increased in at least 10 (ten) years, stated that a tax increase may be necessary in order to provide the necessary services. It was Mr. Truitt’s feeling that their main concern should be for the safety of the citizens.
Mr. Ruane recommended that Chief Horvath, using either the Bartell Manpower Formula or the Equal Patrol Density Formula, should begin assembling the data to present a longer range staffing plan. He suggested that it include information on the average time that it takes to investigate a serious felony, misdemeanor, or traffic accident. How long officer’s spend responding to 911 calls, serving warrants, conducting community police programs, and how much time should be unobligated.
Mr. Ritter stated that he would like to see one of the officer’s utilized as a park ranger. Mr. DePrima stated that he met with the Police Chief and Mr. Carter, Parks and Recreation Director, and they developed three (3) scenarios for park security. He indicated that they would be obtaining pricing information on the security options.
Mr. McGlumphy moved to recommend approval of staff’s recommendation to increase the authorized strength for the City of Dover Police Department, effective July 1, 2003, from 81 officers to 85 officers. The motion was seconded by Mrs. Williams and unanimously carried.
Engineering and Environmental Services - Duke Energy
The City’s contract with Duke Energy provides for $100,000 per year for engineering services at no cost to the City. During the first three (3) years of the contract, these services were not fully utilized; however, in the fourth year, $103,761.52. was used. By the fifth year (2000 - 2001), a new engineer was hired and a long-range plan was developed. It was determined that two major engineering efforts were necessary: (1) to design a standard substation that would be used to build the Dover Downs Substation and all subsequent substations; and (2) to design the 230KV tie station with Conectiv. Both of the engineering efforts enabled the City to capture the $100,000 in engineering services; however, they were estimated to take two (2) to three (3) years to complete and would exceed the service limit in the contract. Once the $100,000 limit was reached, the excess cost related to the continuing work was accumulated and sent to the Finance Department for payment at the end of the year. Using any other engineering options would have cost the City an additional $200,000 - $300,000 in actual cost.
Section 3.8 of the City’s contract with Duke reads as follows: “Dover shall pay all Regulatory Costs related to Governmental Regulations which were promulgated, enacted or imposed after the date of this Contract.” Duke agreed to be responsible for all environmental regulations in effect at the time the contract was signed. Dover agreed to be responsible for any new regulations put into effect after the date the contract was signed.
The following invoices were submitted to, and paid by, the City:
7-20-98 $181,215.25 (1996-97 - 1997-98)
7-15-99 $59,446.05 (1998 - 1999)
8-02-00 $78,847.76 (1999 - 2000)
6-26-01 $45,968.73 (2000 - 2001)
8-16-02 $78,397.13 (2001 - 2002)
The invoices have been accrued as a fiscal year 2002 expense and the Electric Revenue Fund was charged $167,881.47 for contractual and design services and the Electric Improvement and Extension Fund was charged $29,689.32 for the 230KV tie project. Mrs. Mitchell explained that the past practice of paying the invoices was not in compliance with the Purchasing Policy and those errors will be corrected with this action. She noted that a budget revision will be submitted with the mid-year review to ensure budget compliance for any anticipated charges this fiscal year.
Responding to Mr. Ritter, Mr. DePrima stated that bids were not requested since other engineering firms could not compete with the $100,000 credit offered in the contract with Duke Energy.
Staff recommended approval of payments to Duke Energy in the amount of $119,173.66 and $78,397.13 for Engineering and Environmental Services in compliance with the City of Dover Purchasing Policy.
Mrs. Williams moved to recommend approval of staff’s recommendation, seconded by Mr. McGlumphy and unanimously carried.
Mr. Speed moved for adjournment, seconded by Mr. McGlumphy and unanimously carried.
Meeting Adjourned at 7:09 P.M.
Respectfully submitted,
Carleton E. Carey, Sr.
Council President
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