COUNCIL COMMITTEES

The Council Committees Meeting was held on January 24, 2000, at 6:45 p.m., with Council President Christiansen presiding. Members of Council present were Mr. Lambert, Mr. Leary, Mr. Truitt, Mr. Carey, Mrs. Malone, Mr. Salters, and Mr. Weller. Mr. Pitts was absent.

AGENDA ADDITIONS/DELETIONS

Mr. Carey moved for approval of the agenda, seconded by Mrs. Malone and unanimously carried.

LEGISLATIVE AND FINANCE COMMITTEE

The Legislative and Finance Committee met with Chairman Salters presiding. Members present were Councilman Leary, Councilwoman Malone, Mr. Gorman and Mr. Merritt.

Comprehensive Annual Financial Report For The Year Ended June 30, 1999

The City's financial books are audited by independent auditors each year as required by Section 46 of the City Charter. All financial transactions were audited by the selected C.P.A. firm of Faw Casson & Company for fiscal year 1999. The Finance Director/Treasurer reported that the auditors have given the City of Dover a clean (unqualified) opinion. The City has followed the generally accepted accounting principles and the financial statements represent a true and fair position of the City as of June 30, 1999. The City has received the Award of Excellence in Financial Reporting from the Governmental Finance Officers Association of the United States and Canada (GFOA) for the last 13 years. This report was also submitted to the GFOA for evaluation.

Ms. Janis Nesterak, representing Faw Casson & Co., was present to answer questions on the report. She reiterated that the City has been given a "clean opinion" by Faw Casson & Co., and briefly explained the various sections of the Comprehensive Annual Financial Report (CAFR). Ms. Nesterak indicated that the goal of an audit is to obtain reasonable assurance that the financial statements are fairly stated and to detect any material misstatements. She stated that fairness is determined by applying criteria that is known as "generally accepted accounting principles". She explained that the City, as required under governmental accounting standards, has disclosed certain Y2K issues; however, as auditors they are not able to gather sufficient audit evidence related to the Y2K issue.

Ms. Nesterak advised members that the Governmental Accounting Standards Board recently issued a complete overhaul of governmental financial reporting, which will be effective for the City of Dover for the year ending June 30, 2003. As a result, there will be additional financial statements required, which will be more similar to commercial statements. The City’s general fixed assets will be included on the City’s balance sheet. The City will be required to depreciate the assets, will be required to depreciate infrastructure items, such as roads, piers, sidewalks, etc. that, at one time, could be opted not to be included as a fixed asset. The debt of the City will no longer be shown as a separate category but included on the balance sheet. The focus will be on major funds. Ms. Nesterak indicated that these changes will be a major undertaking and will take a significant amount of the City Finance Department’s time to prepare for the new requirements, such as recording of retroactive information on assets, preparation of the information, and preparation of the new format for the financial statements.

Mr. Leary commended City staff for the work that was required to receive such positive comments from our auditors.

Referring to the Statistical Section of the CAFR, Mr. Lambert relayed appreciation for the inclusion of this section, feeling that it contains very interesting and helpful information.

Mrs. Malone moved to recommend acceptance of the Comprehensive Annual Financial Report for Fiscal Year 1999, seconded by Mr. Leary and unanimously carried.

Meeting Adjourned at 7:00 P.M.

UTILITY COMMITTEE

The Utility Committee met with Chairman Lambert presiding. Members present were Councilmen Carey and Weller. Councilwoman Malone and Councilman Truitt were deputized to serve in the absence of Mr. Kramedas and Mr. Nichols.

Middle West Service Company Report on Electric Utility

The City’s Electric Bond Resolutions require that the City retain an independent engineering consultant to inspect the City’s electric system and to review the electric budgets and insurance program. The City’s current engineering consultant is Middle West Service Company. Members reviewed their Annual Report for Fiscal Years 1998/1999 and 1999/2000.

Mr. Karia, Finance Director/Treasurer, briefly summarized the report as follows:

1.Discussion on the positive working of Duke/Fluor Daniel arrangement for the power plant management.

2.Listing of changes/improvements that have taken place at the power plant and the condition of the generating units.

3.Discussion on the City’s fiber optic plan.

4.A mention on the continuous and significant improvement in grounding and outage problems, and a mention of the conversion of 4kv system to 12kv or 22kv.

5.A discussion on the project and funding approval process and the fact that the City has placed more emphasis on the justification of projects.

6.A mention that the revenue and expense budgets for 1999-2000 provide for the adequate operation and maintenance of the electric system according to sound utility practices.

7.A discussion of funding of the Improvement and Extension Fund.

8.A conclusion that, for fiscal year 1999-2000, the rates are adequate from the bondholder’s point of view.

9.A review of the insurance program for our electric system.

The fee for this report is $17,000, including expenses. Staff recommended acceptance of the report as submitted.

Responding to Mr. Salters, Mr. O’Connor explained the importance of having continuity of a firm that is familiar with the City’s electric system. Since the report is done from one year to another, the bondholders and any other interested individual is capable of tracing the progress of the City’s electric system.

Concurring, Mr. Karia further explained that a few years ago bids were solicited from other electrical engineering firms. The prices and time requested were far more than what is offered by Middle West Service Company. He stated that since Middle West Service Company has been working with the City for the past several years, they are able to provide this service at a lower fee and within a shorter period of time since they currently have all the previous data incorporated into a computer program.

Mr. Lambert commended the City Manager on the operations that have been conducted at the Electric Department.

Mr. Carey moved to recommend acceptance of the report, as recommended by staff. The motion was seconded by Mrs. Malone and unanimously carried.

Mrs. Malone moved for adjournment, seconded by Mr. Salters and unanimously carried.

Meeting Adjourned at 7:15 P.M.

                                                                                    Respectfully submitted,

                                                                                    Robin R. Christiansen

                                                                                    Council President

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