COUNCIL COMMITTEES
The Council Committees Meeting was held on October 26, 1998, at 6:30 p.m., with Council President Christiansen presiding. Members of Council present were Mr. Lambert, Mr. Pitts, Mr. Leary, Mr. Truitt, Mr. Carey, Mrs. Malone, Mr. Salters, Mr. Weller, and Mayor Hutchison.
AGENDA ADDITIONS/DELETIONS
Mr. Lambert moved for approval of the agenda, seconded by Mr. Weller and unanimously carried.
LEGISLATIVE AND FINANCE COMMITTEE
The Legislative and Finance Committee met with Chairman Salters presiding. Members present were Councilman Leary, Councilwoman Malone, and Mr. Merritt. Mr. Gorman was absent.
Investment Policy Review
Section 7-2 of the City of Dover Investment Policy permits the investment of City funds in Federal Government Securities. The current practice is to hold these investments until their maturity date. Staff recommends revising the policy to allow for the trading of securities. This will enable the City to take advantage of the changing interest rates, thereby creating additional revenue.
The Finance Director, Mr. Karia, stated that trades would only occur if substantial net gains could be realized ($5,000-$10,000). He also stated that there is a slight amount of risk involved with trading securities, however, good judgement, internal controls, and taking a conservative approach to trading will minimize this risk.
Staff recommended that the Investment Policy be amended as follows:
1. Changing the title of Section 7.0 from “Authorized Investments/Prohibited Investments” to “Authorized Investments/Prohibited Investments and Trading of Securities”.
2. The addition of:
Section 7.6 Trading Securities:
Section 7.6.1 The Financial Director/Treasurer is hereby authorized to buy/sell securities when the net result will generate additional revenues for the City.
Section 7.6.2 Internal Control on such transactions:
1.For each trading, a worksheet showing the profits must be prepared.
2.The chairman and one member of the Legislative and Finance Committee must sign off on the trading. The Finance Director/Treasurer will give them a copy of the worksheet and explain the figures.
3.This worksheet will be provided to the Council with the quarterly investment report.
4.All trading records and supporting documents will be provided to the independent auditors.
5.The records will be kept on City records for ten (10) years.
6.The trading shall not involve any hedge, derivatives and/or borrowing funds for trading purposes.
Mr. Leary stated that he supports the policy change since the City must prepare for a further decline in interest rates. It is his opinion that the Finance Director needs more flexibility to take advantage of the market.
Responding to Mr. Weller, Mr. Karia stated that the key to successful investment management is to provide adequate internal controls so that individual judgement can be used to make money and over-enthusiasm can be controlled to avoid losses. He assured members that those controls would be implemented upon Council’s approval of the recommended changes.
Mayor Hutchison recommended that the City Manager also be included in the trade approval process.
Mr. Leary moved to recommend acceptance of the amendments to the Investment Policy, as recommended by staff, with the addition of the City Manager to the approval process. The motion was seconded by Mrs. Malone and unanimously carried.
Property Tax Lien Extension - Proposed Ordinance Requesting General Assembly to Amend Section 49 of the City of Dover Charter
At the present time, Section 49 of the City Charter establishes three (3) years as the limit for property taxes to remain a lien on property. By contrast, 9 Del. Code §8705(d) allows real estate taxes to continue as a property lien for 10 years.
City Assessor Lucas stated that according to the City Solicitor, extending City tax liens from three (3) to ten (10) years requires a charter change. He submitted a proposed Ordinance requesting the General Assembly to amend Section 49 of the City of Dover Charter to increase the duration of a tax lien from three (3) years to ten (10) years, making it consistent with the duration of a county tax lien.
Mr. Salters moved to recommend that an ordinance be adopted requesting the General Assembly to submit a bill to amend Section 49 of the City Charter (Attachment #1). The motion was seconded by Mr. Leary and unanimously carried.
UTILITY COMMITTEE
The Utility Committee met with Chairman Lambert presiding. Members present were Councilmen Carey and Weller, Mr. Farling, and Mr. Kramedas.
Rodney Village Electric Distribution Upgrade
During the past few years, the Rodney Village Development has experienced power outages, caused by tree conditions and the age of the distribution system. It has recently become necessary to address these power outages.
Mr. O’Connor reminded members that a blanket bid from Fry Electric was previously approved for hourly rates for different levels of personnel and equipment and of the recent approval of the upgrade of the City’s electric system for the Kent Acres Development. Due to the urgency and nature of the situation, he authorized the work to be shifted from the Kent Acres area to the Rodney Village Development, and assigned the work to Fry Electric under the current blanket bid. Although immediate action was necessary for a more expedient resolution to the problem, the total cost of the project for the Rodney Village Electric Distribution Upgrade, estimated at $180,000 - $200,000, requires formal approval by Council.
Staff recommended approval of the contract to Fry Electric for the Rodney Village Electric Distribution Upgrade project for an amount not to exceed $200,000, and that the hourly rates for personnel and equipment will be in accordance with the current approved bid from Fry Electric. Funding for this project will be made available in the Improvement and Extension Fund through the first budget revision.
Mr. Weller moved to recommend acceptance of staff’s recommendation, seconded by Mr. Carey and unanimously carried.
Evaluation of Bids - Relining and Repairs to the City’s Sanitary Sewer System
In accordance with the City’s objective of reducing the amount of inflow infiltration into the City of Dover’s gravity sanitary sewer system, plans and specifications were prepared outlining a pilot project to reline approximately 1,400 linear feet of various size sanitary sewer mains within the sanitary sewer collection system of the White Oak Farms and Town Point Subdivisions.
Specifications and bid documents were prepared and advertised according to City policy. Although five (5) vendors received bid packages, only one vendor, Video Pipe Services, Inc., submitted a bid. Staff directed the consulting engineers to contact all plan holders regarding their lack of response. At the time of the bid opening, there were a number of multimillion dollar projects being bid, therefore, the City did not receive as many bids as anticipated. The bid was reviewed and found acceptable.
Funding for this project is provided in the Wastewater Operating Budget Account. Kent County will reimburse the City for 50% of the total project construction costs as part of the county-wide inflow/infiltration reduction program.
Staff recommended awarding the contract to Video Pipe Services, Inc., in the amount of $52,957.10 to reline the sanitary sewer system in the White Oak Farms and Town Point Subdivisions.
Mr. Carey moved to recommend acceptance of staff’s recommendation, seconded by Mr. Weller and unanimously carried.
Evaluation of Bids - Elevated Water Storage Tank Management Services
In order to maintain the City’s elevated water storage tanks, Staff requested proposals for management and technical services associated with repair to, and maintenance of, the City’s six (6) elevated water storage tank facilities. The management services include furnishing supplies, equipment, labor, and any related services necessary to maintain the integrity of all of the City’s elevated water storage tanks in a manner compatible with industry standards.
Due to the level of detail required, only one (1) vendor submitted a proposal. Several engineering firms reviewed the request for proposal, however, these firms were only interested in an engineering services agreement instead of a management services agreement, which includes actual physical construction and repairs to the tanks.
The sole bidder, Corrosion Control Corp., (Pedricktown, N.J.) submitted the following bid:
Years 1 through 3 - $70,100 annually for all six (6) tanks
Years 4 through 6 - $82,900 annually for all six (6) tanks
Years 7 through 8 - $42,500 annually for all six (6) tanks
Years 8 through 10 - $20,700 annually for all six (6) tanks
All major repairs and painting of the tanks are proposed to occur in years one (1) through six (6); therefore, the cost in the initial years is considerably higher than years seven (7) through ten (10). In addition, years one (1) through six (6) include all improvements to meet federal safety regulations. The City of Dover can terminate this contract at the end of any fiscal year without a penalty; however, the financial proposal is binding on behalf of the vendor.
Staff recommended awarding the management services contract to Corrosion Control Corp. in the amount of $70,100 for fiscal year 1999 management services as outlined in their proposal dated September 9, 1998. Staff will have the ability to extend the contract based on the performance of the vendor and Council’s approval of the annual budget in future years.
Mr. Farling moved to recommend approval of staff’s recommendation, seconded by Mr. Weller and unanimously carried.
Evaluation of Bids - 69 Kv Capacitors
During the past several years, staff has noted a need to develop alternative methods for VAR control during peak system loads. In accordance with the City’s arrangement with Duke Energy, they conducted a study which indicated that there is a need for a 15 MVAR capacitor bank at the Dover Air Force Base Substation.
Bids were solicited for the installation of 15 MVAR capacitors with the sole bid received from Wesco. The bid submitted by Wesco, in the amount of $119,480, includes a main breaker, stage, one capacitor, engineering, and installation. Staff anticipates purchasing only two (2) capacitors in the next fiscal year at an estimated cost of $150,000, which will be submitted to Council for their approval at that time. Staff is proposing the installation of a total of 5 MVAR this year and 10 MVAR next year. In addition to controlling the VAR flow, this capacitor bank will increase the system voltage in this area. Increased system voltage is also needed during peak system loads.
Staff recommended awarding the bid to Wesco in the amount of $119,480 for the capacitor project. Funding, in the amount of $160,000 for one (1) capacitor bank, is available in the Improvement and Extension Fund. From this amount, $40,000 will be expended on steel and concrete work to be performed by the City.
Mr. Carey moved to recommend approval of staff’s recommendation, seconded by Mr. Weller and unanimously carried.
Mr. Leary moved to adjourn, seconded by Mr. Carey and unanimously carried.
Meeting Adjourned at 7:20 P.M.
Respectfully submitted,
Robin R. Christiansen
Council President
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