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HomeMy WebLinkAboutR-1997-113 Amendment to the City’s (ICMA) Section 457• • RESOLUTION NO. R-97-113 A RESOLUTION authorizing amendment of the City's Section 457 Deferred Compensation Plan to provide that Plan :assets will be held in trust by the City for the exclusive benefit of Plan participants and their beneficiaries and authorizing the City Manager to implement a Section 457 Plan loan program if appropriate. WHEREAS, the City. of Yakima has employees rendering valuable services; and WHEREAS, the City has established a Section 457 Deferred Compensation Plan ("Plan") for such employees that serves the interest of the City by enabling it to provide reasonable retirement security for its employees, by providing increased flexibility in its personnel management system, and by assisting in the attraction and retention of competent personnel; and WHEREAS, the City has determined that the continuance of the Plan will serve these objectives; and WHEREAS, 26 U.S.C. §457 of the Internal Revenue Code has been amended to require that all assets of the plan must be held in trust by the City for the exclusive benefit of the plan participants and their beneficiaries; and WHEREAS, said amendment of 26 U.S.C. §457 may permit the implementation of a loan program from Plan assets for Plan participants; and WHEREAS, the Internal Revenue Service ("IRS") has not yet issued regulations regarding implementation of new loan programs from Section 457 deferred compensation plans; and WHEREAS, the City desires to amend and restate its Plan to provide that Plan assets will be held in trust by the City for the exclusive benefit of the Plan participants and their beneficiaries; and WHEREAS, the City also desires to provide the City Manager with the discretion to implement a Section 457 Plan loan program for Plan participants in the event that the IRS issues regulations regarding such loan programs; and WHEREAS, the City Council deems it to be in the best interest of the City to amend and restate the Plan to comply with the amendments to 26 U.S.C. §457 and to provide the City Manager with the discretion to implement a loan program from the Plan for Plan participants, now, therefore; BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: Authorizing the City Manager to implement a Section 457 Plan loan program if and when he deems it appropriate, and amending and restating the City's Section 457 N),c./dekned mmpen..uon/pm Deferred Compensation Plan in the form of the ICMA Retirement Corporation Deferred Compensation Plan and Trust whereby: (A) Plan assets shall be held in trust, with the City serving as Trustee, for the exclusive benefit of the Plan participants and their beneficiaries, and the Plan assets shall not be diverted to any other purpose; and (B) The City agrees to serve as Trustee under the Plan; and (C) The Plan will permit loans if and when the City Manager determines that a Section 457 loan program is appropriate. AD ADOPTED BY THE CITY COUNCIL this r� da of �T , 1997. ATTEST: City Clerk fl ./defend compensation/pm Buchanan, Mayor • • • ITEM TITLE: BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. / 3 For the meeting of Sept. 2, 1997 A Resolution authorizing an amendment to the City's (ICMA) Section 457 Deferred Compensation Plan SUBMITTED BY: Department of Finance & Budget Legal Depar CONTACT PERSON/TELEPHONE: John R. Hanson, Dire 5-6070 Paul McMurray 1' 6030 SUMMARY EXPLANATION: Background - In response to concerns raised with respect to the Orange County fiscal fiasco of several years ago, Federal Government passed curative legislation which impacts 457 Deferred Compensation Programs. The attached Resolution amends and restates the Plan to comply with amendments to Federal Law (26 U.S.C. § 457) specifically to allow: 1) For plan assets to be held in Trust with the City as Trustee; • 2) The City agrees to serve as Trustee; 3) Allows for 457 loans to individuals against their trust account at the discretion of the City Manager and in accordance with IRS rulings and regulations. This is a housekeeping resolution. Resolution X Ordinance _Contract _. Other (Specify) Funding Source APPROVED FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: Staff recommends passage BOARD/COMMISSION RECOMMENDATION: •OUNCIL ACTION: Legal/BD 2 Agenda JH DECLARATION OF TRUST of ICMA RETIREMENT TRUST ARTICLE I. Name and Definitions SECTION 1 1 Name. The Name of the Trust created hereby is the ICMA Retirement Trust. SECTION 1 2. Definitions. Wherever they are used herein, the following terms shall have the following respective meanings (a) By -Laws. The By -Laws referred to in Section 4 1 hereof, as amended from time to time. (b) Deferred Compensation Plan A deferred compensation plan established and maintained by a Public Employer for the purpose of providing retirement income and other deferred benefits to its employees in accordance with the provisions of section 457 of the Internal Revenue Code of 1954 as amended (c) Guaranteed Investment Contract. A contract entered into by the Retirement Trust with insurance companies that provides for a guaranteed rate of return on investments made pursuant to such contract. (d) ICMA. The International City Management Association. (e) ICMA/FIC Trustees. Those Trustees elected by the Public Employers who, in accordance with the provisions of Section 3.1(a) hereof, are also members of the Board of Directors of ICMA or RC. (f) Investment Adviser The Investment Adviser that enters into a contract with the Retirement Trust to provide advice with respect to investment of the Trust Property (g) Employer Trust. A trust created pursuant to an agreement between RC and a Public Employer for the purpose of investing and administering the funds set aside by such employer in connection with its deferred compensation agreements with its employees (h) Portfolios. The Portfolios of investments established by the Investment Adviser to the Retirement Trust, under the supervision of the Trustees, for the purpose of providing investments for the Trust Property (i) Public Employee Trustees. Those Trustees elected by the Public Employers who, in accordance with the provisions of Section 3 1(a) hereof, are full-time employees of Public Employers (j) Public Employer A unit of state or local government, or any agency or instrumentality thereof, that has adopted a Deferred Compensation Plan and has executed this Declaration of Trust. (k) RC. The International City Management Association Retirement Corporation. (1) Retirement Trust. The Trust created by this Declaration of Trust. (m) Trust Property The amounts held in the Retirement Trust on behalf of the Public Employers The Trust Property shall include any income resulting from the investment of the amounts so held (n) Trustees. The Public Employee Trustees and ICMA/RC Trustees elected by the Public Ernployers to serve as members of the Board of Trustees of the Retirement Trust, ARTICLE II. Creation and Purpose of the Trust; Ownership of Trust Property SECTION 2.1 Creation The Retirement Trust is created and established by the execution of this Declaration of Trust by the Trustees and the participating Public Employers. SECTION 2.2. Purpose. The purpose of the Retirement Trust is to provide for the commingled investment of funds held by the Public Employers in connection with their Deferred Compensation Plans. The Trust Property shall be invested in the Portfolios, in Guaranteed Investment Contracts and in other investments recommended by the Investment Adviser under the supervision of the Board of Trustees. SECTION 2.3 Ownership of Trust Property The Trustees shall have legal title to the Trust Property The Public Employers shall be the beneficial owners of the Trust Property ARTICLE III. Trustees SECTION 3 1 Number and Qualification of Trustees. (a) The Board of Trustees shall consist of nine Trustees. Five of the Trustees shall be full-time employees of a Public Employer (the Public Employee Trustees) who are authorized by such Public Employer to serve as Trustee. The remaining four Trustees shall consist of two persons who, at the time of election to the Board of Trustees, are members of the Board of Directors of ICMA and two persons who, at the time of election, are members of the Board of Directors of RC (the ICMA/RC Trustees) One of the Trustees who is a director of ICMA, and one of the Trustees who is a director of RC, shall, at the time of election, be full-time employees of a Public Employer (b) No person may serve as a Trustee for more than one term in any ten-year period SECTION 3.2. Election and Term (a) Except for the Trustees appointed to fill vacancies pursuant to Section 3.5 hereof, the Trustees shall be elected by a vote of a majority of the Public Employers in accordance with the procedures set forth in the By -Laws Ib) At the first election of Trustees, three Trustees shall be elected for a term of three years, three Trustees shall be elected for a term of two years and three Trustees shall be elected for a term of one year At each subsequent election, three Trustees shall be elected for a term of three years and until his or her successor is elected and qualified SECTION 3 3 Nominations. The Trustees who are full-time employees of Public Employers shall serve as the Nominating Committee for the Public Employee Trustees. The Nominating Committee shall choose candidates for Public Employee Trustees in accordance with the procedures set forth in the By -Laws. SECTION 3 4 Resignation and Removal (a) Any Trustee may resign as Trustee (without need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and delivered to the other Trustees and such resignation shall be effective upon such delivery, or at a later date according 1 to the terms of the instrument Any of the Trustees may be removed for cause, by a vote of a majority of the Public Employers (b) Each Public Employee Trustee shall resign his or her position as Trustee within sixty days of the date on which he or she ceases to be a full-time employee of a Public Employer SECTION 3.5. Vacancies. The term of office of a Trustee shall terminate and a vacancy shall occur in the event of the death, resignation, removal, adjudicated incompetence or other incapacity to form the duties of the office of a Trustee. In the case of a vacancy, the naining Trustees shall appoint such person as they in their discretion shall see tit (subject to the limitations set forth in this Section), to serve for the unexpired portion of the term of the Trustee who has resigned or otherwise ceased to be a Trustee. The appointment shall be made by a written instrument signed by a majority of the Trustees. The person appointed must be the same type of Trustee (i.e., Public Employee Trustee or ICMA/RC Trustee) as the person who has ceased to be a Trustee An appointment of a Trustee may be made in anticipation of a vacancy to occur at a later date by reason of retirement or resignation, provided that such appointment shall not become effective prior to such retirement or resignation Whenever a vacancy in the number of Trustees shall occur, until such vacancy is filled as provided in this Section 3.5, the Trustees in office, regardless of their number, shall have all the powers granted to the Trustees and shall discharge all the duties imposed upon the Trustees by this Declaration. A written instrument certifying the existence of such vacancy signed by a majority of the Trustees shall be conclusive evidence of the existence of such vacancy SECTION 3.6. Trustees Serve in Representative Capacity By executing this Declaration, each Public Employer agrees that the Public Employee Trustees elected by the Public Employers are authorized to act as agents and representatives of the Public Employers collectively ARTICLE IV. Powers of Trustees SECTION 4 1 General Powers. The Trustees shall have the power to •onduct the business of the Trust and to carry on its operations. Such ewer shall include, but shall not be limited to, the power to (a) receive the Trust Property from the Public Employers or from a Trustee of any Employer Trust; (b) enter into a contract with an Investment Adviser providing, among other things, for the establishment and operation of the Portfolios, selection of the Guaranteed Investment Contracts in which the Trust Property may be invested, selection of other investments for the Trust Property and the payment of reasonable fees to the Investment Adviser and to any sub -investment adviser retained by the Investment Adviser; (c) review annually the performance of the Investment Adviser and approve annually the contract with such Investment Adviser; (d) invest and reinvest the Trust Property in the Portfolios, the Guaranteed Investment Contracts and in any other investment recommended by the Investment Adviser, provided that if a Public Employer has directed that its monies be Invested in specified Portfolios or in a Guaranteed Investment Contract, the Trustees of the Retirement Trust shall invest such monies in accordance with such directions, (e) keep such portion of the Trust Property in cash or cash balances as the Trustees, from time to time, may deem to be in the best interest of the Retirement Trust created hereby, without liability for interest thereon, (f) accept and retain for such time as they may deem advisable any securities or other property received or acquired by them as Trustees hereunder, whether or not such securities or other property would normally be purchased as Investments here- under; (g) cause any securities or other property held as part of the Trust Property to be registered in the name of the Retirement Trust or in t ne name of a nominee, and to hold any investments in bearer form, but the books and records of the Trustees shall at all times show that all such investments are a part of the Trust Property; (h) make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; (i) vote upon any stock, bonds, or other securities; give general or special proxies or powers of attorney with or without power of substitution; exercise any conversion privileges, subscription rights, or other options, and make any payments incidental thereto; oppose, or consent to, or otherwise participate in, corporate reorganizations or other changes affecting corporate securities, and delegate discretionary powers, and pay any assessments or charges in connection therewith, and generally exercise any of the powers cif an owner with respect to stocks, bonds, securities or other property held as part of the Trust Property; (j) enter into contracts or arrangements for goods or services required in connection with the operation of ttie Retirement Trust, including, but not limited to, contracts with custodians and contracts for the provision of administrative services; (k) borrow or raise money for the purpose of the Retirement Trust in such amount, and upon such terms and conditions, as the Trustees shall deem advisable, provided that the aggregate amount of such borrowings shall not exceed 30% of the value of the Trust Property No person lending money to the Trustees shall be bound to see the application of the money lent or to inquire into its validity, expediency or propriety of any such borrowing, (I) incur reasonable expenses as required for the operation of the Retirement Trust and deduct such expenses from the Trust Property; (m) pay expenses properly allocable to the Trust Property incurred in connection with the Deferred Compensation Plans or the Employer Trusts and deduct such expenses from that portion of the Trust Property beneficially owned by the Public Employer to whom such expenses are properly allocable; (n) pay out of the Trust Property all real and personal property taxes, income taxes and other taxes of any and all kinds which, in the opinion of the Trustees, are properly levied, or assessed under existing or future laws upon, or in respect of, the Trust Property arid allocate any such taxes to the appropriate accounts; (o) adopt, amend and repeal the By -Laws, provided that such By - Laws are at all times consistent with the terms of this Declaration of Trust; (p) employ persons to make available interests in the Retirement Trust to employers eligible to maintain a deferred compensation plan under section 457 of the Internal Revenue Code, as amended, (q) issue the Annual Report of the Retirement Trust, and the disclosure documents and other literature used by the Retirement Trust; (r) make loans, including the purchase of debt obligations, provided that all such loans shall bear interest at the current market rate, (s) contract for, and delegate any powers granted hereunder to, such officers, agents, employees, auditors and attorneys as the Trustees may select, provided that the Trustees may not delegate the powers set forth in paragraphs (b), (c) and (o) of this Section 4 1 and may not delegate any powers if such delegation would violate their fiduciary duties; (t) provide for the indemnification of the officers and Trustees of the Retirement Trust and purchase fiduciary insurance, (u) maintain books and records, including separate accounts for each Public Employer or Employer Trust and such additional separate accounts as are required under, and consistent with, the Deferred Compensation Plan of each Public Employer; and 2 iv) do all such acts, take all such proceedings, and exercise all such rights and privileges, although not specifically mentioned herein, as the Trustees may deem necessary or appropriate to administer the Trust Property and to carry out the purposes of the Retirement Trust. SECTION 4 2. Distribution of Trust Property Distributions of the Trust Property shall be made to, or on behalf of, the Public Employer, in accordance with the terms of the Deferred Compensation Pians or ployer Trusts The Trustees of the Retirement Trust shall be fully otected in making payments in accordance with the directions of the ublic Employers or the Trustees of the Employer Trusts without ascertaining whether such payments are in compliance with the provisions of the Deferred Compensation Plans or the agreements creating the Employer Trusts. SECTION 4 3, Execution of Instruments. The Trustees may unanimously designate any one or more of the Trustees to execute any instrument or document on behalf of all, including but not limited to the signing or endorsement of any cneck and the signing of any applications, insurance and other contracts, and the action of such designated Trustee or Trustees shall have the same force and effect as if taken by all the Trustees. ARTICLE V. Duty of Care and Liability of Trustees SECTION 5 1 Duty of Care. In exercising the powers hereinbefore granted to the Trustees, the Trustees shall perform all acts within their authority for the exclusive purpose of providing benefits for the Public Employers, and shall perform such acts with the care, skill, prudence and diligence in the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. SECTION 5.2. Liability The Trustees shall not be liable for any mistake of judgment or other action taken in good faith, and for any action taken or omitted in reliance in good faith upon the books of ccount or other records of the Retirement Trust, upon the opinion of unsel, or upon reports made to the Retirement Trust by any of its • ;:fficers, employees or agents or by the Investment Adviser or any sub- ,nvestment adviser, accountants, appraisers or other experts or consultants selected with reasonable care by the Trustees, officers or employees of the Retirement Trust. The Trustees shall also not be liable for any loss sustained by the Trust Property by reason of any investment made in good faith and in accordance with the standard of care set forth in Section 5.1 SECTION 5.3. Bond No Trustee shall be obligated to give any bond or other security for the performance of any of his or her duties hereunder ARTICLE VI. Annual Report to Shareholders The Trustees shall annually subrnit to the Public Employers a written report of the transactions of the Retirement Trust, including financial statements which shall be certified by independent public accountants chosen by the Trustees. ARTICLE VII. Duration or Amendment of Retirement Trust SECTION 7 1 Withdrawal A Public Employer may, at any time, with- draw from this Retirement Trust by delivering to the Board of Trustees a statement to that effect. The withdrawing Public Employer's beneficial interest in the Retirement Trust shall be paid out to the Public Employer or to the Trustee of the Employer Trust, as appropriate. SECTION 7 2. Duration. The Retirement Trust shall continue until terminated by the vote of a majority of the Public Employers, each casting one vote. Upon termination, all of the Trust Property shall be paid out to the Public Ernployers or the Trustees of the Employer Trusts, as appropriate SECTION 7 3. Amendment. The Retirement Trust may be amended by the vote of a majority of the Public Employers, each casting one vote. SECTION 7 4 Procedure A resolution to terminate or amend the Retirement Trust or to remove a Trustee shall be submitted to a vote of the Public Employers if. (a) a majority of the Trustees so direct, or (b) a petition requesting a vote, signed by not less than 25% of the Public Employers, is submitted to the Trustees. ARTICLE VIII. Miscellaneous SECTION 8.1 Governing Law Except as otherwise required by state or local law, this Declaration of Trust and the Retirement Trust hereby created shall be construed and regulated by the laws of the District of Columbia. SECTION 8 2. Counterparts. This Declaration may be executed by the Public Employers arid Trustees in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 3 ICMA Retirement Corporation THE DECLARATION OF TRUST FOR THE ICMA RETIREMENT TRUST: SUMMARY The ICMA Retirement Trust is a new feature of our organizational structure. We currently have a direct Retirement Trust relation- ship with you which will continue. The new trust establishes a Board of Trustees selected by participating employees, thus giving the employers ultimate control over the management of funds. Included in the Trustees° responsibilities are oversight of our performance, appointment of auditors, and monitoring of investment goals and objectives. The Retirement Trust was created by a Founders Committee of persons representative of the participants in the RC program. The first elections were held in November 1983. Nine Trustees were elected: five at -large members represent RC participating employers, two represent the RC Board of Directors, and two represent the ICMA Executive Board. Public employers that adopted the trust partici- pated in that election. The next election will be held in spring 1985. All investments made on your behalf currently are held under the ICMA Retirement Trust. However, unless you adopt the Declaration of Trust, investment will not be held thereunder following a transitional period. Therefore, while failure to adopt the Declaration of Trust will not directly affect your plan or have any immediate effect on the investment of your funds, it is required for your full and continuing participation in the Retirement Trust. These changes improve and enhance the program. The addition of the ICMA Retirement Trust is done in the spirit of our long-standing objective of serving the best interests of our. participants. If you need additional information, please call our office toll-free at 800-424-9249. As always, we are prepared to assist you. 8/84 EIVIA R I1REMEN T CORPORATION 1120 Area Code 202 G Street 737-6616 Northwest Suite 700 Toll tree 800 Washtngton DC 424-9249 20005 FILE INFORMATION SHEET The information you provide on this sheet is essential for proper plan administration. As you complete this form, please refer to the instructions on the reverse side. 1 Employer's full name (City of, County of, etc.) 2. Plan Coordinator (Name and title of official to whom all correspondence and reports are to be mailed) 3 Employer's address (street PO Box. etc ) (C)ty) I state) (zip code) 4. Phone number 5. Employer's Federal Tax Identification Number 6. How often will you make contributions? 7 What is the first pay date of plan implementation? 8 Number of employees eligible to participate 9 Total number of employees INSTRUCTIONS 1 Employer's name Please provide the full name of the organization 2 Plan Coordinator This official is designated in the resolution as the person who will receive all correspondence, literature, reports, and financial information from RC 3 Address Please give the address RC should use to mail account statements, reports, literature, etc 4 Phone number The Plan Coordinator's phone number should be provided 5 Employer's Federal Tax Identification Number Ths is the number the Internal Revenue Service has assigned to you for the purpose of federal tax reporting It is the same number appearing on your federal withholding reports, federal W-2 forms, and Social Security reports 6 Contribution frequency You should make con- tributions so they can be standardized to equal payments (Corrections for rounding may be made periodically ) Our experience has been that employers find it convenient to make contribu- tions each payday or every other payday We are able to handle contributions at these intervals a. Weekly b Biweekly (every two weeks) c. Semimonthly (twice each month, use only if your payday is twice each month) d Monthly (do not use if your payday is weekly or biweekly) e Every 4 weeks (use if your payday is every 4 weeks or every 2 weeks) f Quarterly g Semiannually h. Annually Earnings may be affected if contributions are made less frequently than payroll deductions. If deducted funds are accumulated by the employer over a number of pay periods before being con- tributed, employees' deferred compensation account earnings will accrue at a slower rate. 7 First paydate of plan implementation. This is to establish timing for our computer program which prepares contribution statements for you. If you cannot estimate when the first employees will actually enroll, leave this blank You will receive a blank contribution statement with your plan acceptance package. When you are ready to send the first contribution, use this blank form and indicate the next contribution date on the form 8 Employees eligible to participate This applies especially to those employers whose plan re- stricts participation to certain employees or groups of employees. 9 Total number of employees. Give approximate number of current employees of the municipality EMPLOYER NAME: City of Yakima As authorized by resolution, I hereby execute the Declaration of Trust of the ICMA Retirement Trust. Signature \� City Manager Title November 8. 1988 Date Attest: Signature BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. / �O For Meeting Of September 25, 1984 ITEM TITLE: A Resolution authorizing the execution of an ICMA trust agreement. SUBMITTED BY: R.H. Weaver, Personnel Office CONTACT PERSON/TELEPHONE: R.H. Weaver 575-6090 SUMMARY EXPLANATION: Since 1975, the City has maintained a deferred compensation plan which is administered by the International City Management Association Retirement Corporation (ICMA-RC). Recently, other employers also participating in the ICMA-RC deferred compensation program, joined to establish the ICMA-RC Retirement Trust. The purpose of the trust is to further advance the quality of admin- istration of the deferred compensation plans through added repre- sentation of employer's interests. This Resolution authorizes the City of Yakima to join the ICMA Retirement Trust and will entitle the City to a voice in the management of deferred compensation funds by electing a board of trustees. f *************************************************************************************** * * Minutes Plan/Map * (Specify) Trust Agreement and explanatory document * * * * * XX Resolution Ordinance Contract * Notification List: Yes No Other * * APPROVED FOR. SUBMITTAL: * Cr MANAGER *************************************************************************************** EXHIBITS * STAFF RECOMMENDATION: Adopt Resolution BOARD/COMMISSION RECOMMENDATION: N/A COUNCIL ACTION: STDCII FF1 RESOLUTION NO. 1) 5 0 2 A RESOLUTION authorizing the execution of an ICMA trust agreement. WHEREAS, the City maintains a deferred compensation plan for its employees which. is administered by the ICMA Retirement Corporation, and WHEREAS, other public employers have joined together to establish. the ICMA Retirement Trust for the purpose of representing the interests of the participating employers with respect to the collective investment of funds held under their deferred compen- sation plans, which. trust is a salutary development which further advances the quality of administration for plans administered by the ICMA Retirement Corporation, and WHEREAS, the City Council deems it to be in the best interests of the City that the ICMA retirement trust document attached to this agreement be executed by the City in order that the trust program may be available. to City employees, now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager and City Clerk of the City of Yakima are hereby authorized and directed to execute the ICMA Retirement Trust agreement, a copy of which. is attached to this resolution; and it is further resolved that the City Manager of the City of Yakima shall be the coordinator for the program and shall receive necessary reports, notices, etc. from the ICMA Retirement Corpora- tion as Administrator, and shall cast, on behalf of the City, any required votes under the program. Administrative duties to carry out the plan may be assigned to the appropriate departments. 0 ADOPTED BY THE CITY COUNCIL this .5 / day of 1984. ATTEST: Mayor City Clerk