LEGISLATIVE AND FINANCE COMMITTEE

The Legislative and Finance Committee met on September 25, 1990 at 7:00 p.m. with Chairman Weyandt presiding. Members present were Councilmen Hall and Lynn and Mr. Leary. Other members of Council present were Mr. Salters, Mr. Christiansen, Mr. Daisey, and Mr. VanSant.

AGENDA ADDITIONS/DELETIONS

Mr. Weyandt reported that WREN Radio Station has requested that item #3 be deferred and he requested that item #11 "Update on Ambulance Service" be deferred until after meetings with Kent. County Levy Court. Mr. Weyandt requested that discussion on the City Manager's monthly report be added to the agenda.

Mr. Hall moved for approval of the agenda as amended, seconded by Mr. Lynn and unanimously carried.

COMMUNITY GRANT FOUNDATION

At the August committee meeting, staff was directed to gather additional information on a community grant foundation concept and to research guidelines for an in-house grants program.

In researching the community foundation concept, it was discovered that a Delaware Community Foundation exists and is a member of the national Council on Foundations. The Delaware Community Foundation has offices in Wilmington, Delaware. They are willing to establish a separate advisory group, made up of Dover residents, to manage a Dover Foundation as a branch of the Delaware Community Foundation. This is a very common approach to foundations in smaller cities.

Regarding an in-house community grants program, staff contacted the Management Information Service of ICMA and obtained some information, although specific guidelines were not received. If the City should decide to establish an in-house program, then guidelines would have to be developed internally within the framework of public purpose. Funds would be budgeted; applications solicited; applications received in accordance with guidelines; grants awarded and year-end audits of grantees would be performed to confirm grants were spent in accordance with the grant award guidelines.

Staff recommended that the Community Foundation concept be pursued, feeling that it would be very difficult for the City to make objective decisions on grants internally.

As requested by the committee, staff invited a representative of the Delaware Community Foundation to address the committee. Mr. Collis Townsend, Executive Director, explained that the mission of the Delaware Community Foundation is to encourage greater philanthropic activity to benefit the people of Delaware. The Foundation believes in "today's investment for tomorrow's needs". To achieve their mission, the Foundation has established the following four objectives:

1. To provide a cost-efficient, effective philanthropic vehicle for use by a broad range of donors in achieving their charitable objectives.

2. To develop a pool of unrestricted endowment funds and distribute the income from the funds in support of established institutions and ongoing projects, to respond to the changing needs of the community, and to assist new organizations by providing start-up funds.

Mr. Hall stated that the City needs a more equitable way of disbursing contributions to charitable organizations, but he feared that using the Delaware Community Foundation would be far more than what is needed, reminding members that the City's contributions are usually modest. Mr. Townsend stated that the Dover branch of the Foundation could be organized to meet the specific needs of Dover.

Mr. VanSant objected to a state-wide organization controlling the charitable contributions of the City of Dover. When he originally requested a Community Grant Fund, he was searching for an internal solution to equitable disbursement of funds to charitable organizations. Since this has not been accomplished, Mr. VanSant requested that his request. be withdrawn.

Mr. Worley explained that utilization of an internal Community Grant Fund is more difficult than it first seems. The City must first establish a limit on monies to be disbursed and set up equitable criteria for the selection process. An application process must be established and follow-up by staff would be necessary to ensure that appropriated funds were spent in accordance with the grant guidelines. The Community Foundation approach has been successful in other communities and has the ability to generate donations from other sources than the City.

Some members of the committee stated that citizens have objected to utilization of taxpayer's money for contribution to charitable organizations and expressed concern with transferring funds to a state-wide organization for this purpose.

Realizing that the City is going to make small donations to needy organizations, Mr. Weyandt felt that designating a certain amount of money for this purpose to a Community Foundation for disbursement would be more equitable.

Mr. Lynn moved to table action on a Community Grant Foundation, seconded by Mr. Leary and unanimously carried.

CITY MANAGER'S MONTHLY REPORTS

Referring to the City Manager's monthly reports, Mr. Weyandt stated that it is very resourceful and detailed. Since he does not wish to take time on the Council floor to discuss all details of the report, he requested that the Legislative and Finance Committee review the financial sections of the City Manager's report. This will be a standing item on the Legislative and Finance Committee agenda.

DEVELOPMENT INCENTIVES - DOWNTOWN DOVER DEVELOPMENT CORPORATION

As instructed by Council, the DDDC Development Subcommittee has been considering incentives that would encourage redevelopment of the City of Dover downtown core area. The subcommittee has discussed this matter with developers and discovered that it is less costly and easier to construct outside of the central Dover area. For developers to build in the downtown area, they must consider the destruction

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of an existing building and the costs involved, low value property being reassessed after improvements are made, the requirement of impact fees, and significant building permit fees, which discourages developers to build in the downtown area. Developers are interested in mixed-use residential, commercial and office combination buildings and have a concern with building height restrictions and zonings that prohibit multi-story buildings in the downtown area. Developers want to have the ability to arrive at a net cost per square foot of construction. In order to redevelop the downtown area, the DDDC feels that the City must provide a cost incentive for developers.

Upon receiving information from developers, consideration was given to creating an incentive package that would include tax abatement, impact fee waiver, building permit fee waiver, and revenue bond refinancing, that could be utilized over a period of time. To encourage developers to explore the opportunities in the area immediately, the subcommittee recommended that a "window of opportunity" be created, as follows:

A. Tax Abatement

1. Window of Opportunity - Developers have three years from the effective approval date to begin development;

2. Taxes -- Developer will pay the amount of property taxes assigned to the property at the time of sale for a period of ten (10) years;

3. Abatement Period - The ten year freeze on taxes begins with the date of issuance of a building permit;

4. Target Area - The Central Area as defined in the study, more specifically, Cecil Street to Hope Street and the Railroad east to the St. Jones River;

5. Eligibility - Commercial, Retail, Office and Residential uses for renovation and construction activities.

B. Impact Fee Waiver

1. Any project that maximizes land use (multi-story, mixed-use residential, commercial and office combination) in the designated development area will be eligible for impact fees waiver.

C. Building Permit

1. Building permit fees will be capped at $1,000 for projects within the targeted area.

D. Revenue Bonds

1. The DDDC will assist developers in pursuit of revenue bond financing through the Delaware Economic Development Office.

The above information was presented and discussed with members of City Council during a workshop on September 18, 1990. At that time, members requested that the incentives be drafted in ordinance form and that additional information be provided for review by the Legislative and Finance Committee.

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Mr. Worley submitted detailed background information on development incentives offered by New Castle County, Kent County, Sussex County, Wilmington, Newark and Salisbury. He also provided members with a draft copy of an ordinance, prepared by the Solicitor, of the incentives recommended by the DDDC for the City of Dover (attachment #1).

Mr. Weyandt voiced concern with the proposal to utilize a building permit time frame, feeling that developers could be holding off on obtaining a building permit until after the proposal receives Council approval. He also disagreed with the 10 year tax abatement program, feeling that taxes should be increased 10% annually for full taxation at the end of the 10 year period.

Mr. VanSant strongly objected to consideration of the waiving of impact fees since the Utility Committee has not reviewed the matter and was not apprised of this matter in advance.

Noting that Mr. VanSant was not present during the September 18th workshop, Mr. Wayne Holden, Vice-President of the DDDC, informed Mr. VanSant that the proposed development incentives were presented to members of Council. After the workshop, the DDDC requested that the City Manager pass their recommendations through all the City committees for review. Mr. Worley assured Council that all affected committees will review the proposals of the DDDC.

Regarding the draft ordinance, Mr. Holden stated that Section 3 does not clearly state the time frame of three years for development after building permit approval.

Members of the committee discussed the feeling of some citizens that one area of the City should not be given advantages that are not offered to the rest of the City. Mr. Salters stated that downtown Dover is like a sick child; it needs special attention and must be treated different from other parts of the City until it once again becomes a viable part of the City.

Mr. Lynn moved to recommend that City staff review the recommendations of the DDDC for a full report on the proposals, including all advantages/disadvantages of each proposal, and that the DDDC's recommendations be referred to the appropriate City committees for review. The motion was seconded by Mr. Hall and unanimously carried.

ELECTRIC REVENUE BONDS - SERIES 1990 -- LEGAL FEES

In December 1989, Council approved the concept of an Electric Revenue Bond Issue for refunding the 1985 bonds and for financing the 40MW turbine project. Potter Anderson and Corroon was selected as the Bond Counsel at a fee of $37,500 and out of pocket expenses of $2,000.

Bond Counsel's initial bill totaled $74,000; after intense discussion it was reduced to $60,000. The out of pocket expenses were billed at $6,000. The reason for the increased legal fees was a legal matter related to noise control which delayed the issue, requiring additional work and review by Bond Counsel. Other reasons for the additional fees included private use rule and complications related to interconnection with DP&L, new regulations applicable to advanced refunding, arbitrage rebate study, extensive review of the feasibility study and the official statement.

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During the bond issue, Bond Counsel informed the City that they were spending more time than initially projected. Due to the nature of the legal work and the project, the work had to be carried out and completed.

Mr. Karia explained that the legal fees and expenses are paid from the bond issue, with $60,000 having been included for this expense.

Council initially approved legal fees of $37,500 and out of pocket expenses of $2,000, totaling $39,500. Legal fees now total $60,000 with out of pocket expenses at $6,000, totaling $66,000. Mr. Karla requested that the committee authorize an additional expenditure of $26,500 (additional $22,500 in legal fees and additional $4,000 in out of pocket expenses).

Mr. Lynn moved to recommend authorization of an additional expenditure of $22,500 for legal expenses and $4,000' for out of pocket expenses to Potter Anderson and Corroon for the Electric Revenue Bonds - Series 1990. The motion was seconded by Mr. Leary and carried with Mr. Hall voting no.

PROPOSED ORDINANCE AMENDMENTS AND CREATION OF ELECTION BOARD

With recent Charter amendments relative to the creation of a Council President position on Council, many sections of the City Code were affected but have not been amended. The City Clerk and City Solicitor reviewed several sections that require Council action.

Due to the complexity of the many Charter amendments, Mr. Hall moved to recommend that a workshop be scheduled to review, in detail, the proposed Charter and ordinance amendments, seconded by Mr. Lynn and unanimously carried.

The proposal for the creation of an election board will also be discussed at the workshop.

PRIVATIZATION -- CITY AUTOMOTIVE SHOP

During the past few years, consideration has been given to the benefits of contracting with a private vendor to perform fleet maintenance and repair services. Recently, the Vehicle Maintenance Division has experienced difficulty in repairing the automated RAND refuse collection vehicles. Staff determined that a study should be performed to determine the feasibility of privatization. The study was performed by Celeste Arkins, an administrative intern in the City Manager's Office, from Delaware State College. The study was conducted with the assistance of all City departments and the private sector.

Data compiled during the study was carefully analyzed, and it became apparent that several problems existed within the vehicle maintenance division:

1. Lack of pertinent repair or preventive maintenance data on vehicles; 2. Excessive number of re-repair jobs;

3. Lack of mechanic training in hydraulics and repair of automated refuse vehicles;

4. Inadequate utilization of analyzer machine to assist with development of repair strategy resulting in a "hit or miss" score of repair;

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5. Lack of technical support from the RAND Corporation and failure to provide repair manuals for automated vehicles;

6. Lack of supervision by the immediate shop supervisor in assigning duties, evaluating performance, ensuring availability of proper equipment and parts, and determining productivity levels for the shop.

Most of the problems associated with the automated collection vehicles were through no fault of the Vehicle Maintenance Division but lack of support from RAND. This was confirmed through a number of conversations with the fleet managers from Salisbury, Maryland and Norfolk, Virginia as well as from a meeting with representatives from the RAND Corporation. However, the vehicle maintenance supervisor did not take any action to address this issue through mechanic training initiatives.

Staff determined that two viable options existed to resolve the problems identified: (1) privatization and (2) reorganization of the Vehicle Maintenance Division. The privatization option was initially pursued because the City received two non-binding quotes from fleet maintenance firms which were very close to projected budgeted figures for the in-house service. Furthermore, staff concluded that a private firm could meet our goals of reduced fleet maintenance with improved vehicle longevity and improved maintenance services with the least disruption to City services and in the most efficient manner.

A Request for Proposal for a fleet management/maintenance and repair program was developed and issued to three national firms. Detailed proposals were received from Lear Siegler Management Service Corp. (LSMCS) and Managed Logistics Systems, Inc. (MLS), as follows:

* LSMCS MLS Total Annual Operating Target $396,910.70 $461,978

Cost Incentive --- (Percent of 40% 50% Aggregate Savings Below Annual

Operating Target Shared With Firm)