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Item 6AAGENDA ITEM # 6A CITY OF ATLANTIC BEACH MAY 27' Zoos CITY COMMISSION MEETING STAFF REPORT AGENDA ITEM: RESOLUTION 08-07 OF THE CITY OF ATLANTIC BEACH, FLORIDA ESTABLISHING A SECOND DEFERRED RETIREMENT OPTION PROGRAM (DROP) PLAN TO SEPARATELY ACCOUNT FOR POLICE OFFICER AND GENERAL EMPLOYEE BENEFITS; CHANGE THE PLAN NAME OF THE EXISTING DROP PLAN; AND, CHANGE THE DESIGNATED PLAN COORDINATOR OF THE EXISTING DROP PLAN SUBMITTED BY: Nelson Van Liere, Finance Director DATE: May 12, 2008 BACKGROUND: The City established one Deferred Retirement Option Program (DROP) in 2004 for both the General Employee Retirement System and Police Officers' Retirement System. The State of Florida has advised the City that they need to have a separate DROP account for each of the two City retirement plans. The attached Resolution and Administrative Services Agreement (Declaration of Trust) will enable the ICMA to establish a new DROP account for the General Employee DROP participant investments; reallocate assets for the General Employees who are currently participating in the DROP to the new DROP account; rename the existing DROP account to reflect activity of the Police DROP participants only; and, assign the Finance Director as the Plan Coordinator of both DROP plans. BUDGET: Administrative expenses will be paid by the DROP participants. RECOMMENDATIONS: 1. Approve the Resolution selecting the ICMA Retirement Corporation (RC) as the investment administrator for the City's new DROP account and naming the Finance Director as the Plan Coordinator for both the existing and new DROPS; and, 2. Authorize the City Manager to sign the Administrative Services Agreement and other related documents. ATTACHMENT: 1. Resolution 2. Administrative Services Agreement CITY MANAGER: AGENDA ITEM # 6A MAY 27, 2008 RESOLUTION NO: 08-07 A RESOLUTION OF THE CITY OF ATLANTIC BEACH, FLORIDA ESTABLISHING A SECOND DEFERRED RETIREMENT OPTION PROGRAM (DROP) PLAN TO SEPARATELY ACCOUNT FOR POLICE OFFICER AND GENERAL EMPLOYEE BENEFITS; CHANGE THE PLAN NAME OF THE EXISTING DROP PLAN; AND, CHANGE THE DESIGNATED PLAN COORDINATOR OF THE EXISTING DROP PLAN WHEREAS, the City of Atlantic Beach has employees rendering valuable services; and WHEREAS, the City established an ICMA-RC DROP plan through Resolution No. 04-04 to benefit employees by providing funds for retirement and funds for their beneficiaries in the event of death; and WHEREAS, the State of Florida has advised the City to have separate DROP plans for each of the two City retirement plans, Police Officer and General Employee, and WHEREAS, the City of Atlantic Beach desires that the new DROP plan also be administered by the ICMA-RC and that the funds held by such a plan be invested in the VantageTrust Company, a trust established by public employers for the collective investment of funds held under their retirement and deferred compensation plans, and WHEREAS, the City would like to designate the Finance Director to be the plan coordinator for both the existing DROP administered by the ICMA-RC, plan # 108619, and the new DROP plan: NOW, THEREFORE, BE TT RESOLVED BY THE MAYOR AND COMMISSION OF THE CITY OF ATLANTIC BEACH THAT; 1. The City of Atlantic Beach hereby establishes a new DROP plan for the benefit of general employees to be titled (401) City of Atlantic Bch (DROP) General (the "General Employee Plan") in the form of the Plan and Trust provided by the City of Atlantic Beach (executed copy attached hereto), and 2. The General Employee Plan shall be maintained for the exclusive benefit of eligible general employees and their beneficiaries; and 3. The existing DROP plan, Plan # 108619 (401) City of Atlantic Beach (DROP) Police, to be used exclusively for the benefit of eligible police officers (the "Police Officer Plan"); and AGENDA ITEM # 6A MAY 27, 2008 4. The City of Atlantic Beach hereby executes the Declaration of Trust of the VantageTrust Company, and attached hereto, intending this execution to be operative with respect to any retirement or deferred compensation plan subsequently established by the City of Atlantic Beach, if the assets of the plan are to be invested in the VantageTrust Company. 5. The City of Atlantic Beach hereby agrees to serve as trustee under the General Employee Plan and to invest funds held under the General Employee Plan in the VantageTrust Company; and 6. The Finance Director shall be designated the plan coordinator for the General Employee Plan and the Police Officer Plan; shall receive reports, notices, etc., from the ICMA-RC or the VantageTrust Company; shall cast, on behalf of the City of Atlantic Beach, any required votes under the VantageTrust Company; may delegate any administrative duties relating to the General Employee Plan and/or Police Officer Plan to appropriate departments; and 7. The Finance Director will coordinate with ICMA-RC to transfer the existing general employee assets in Plan # 108619 into the General Employee Plan in a timely manner; and 8. The City of Atlantic Beach hereby authorizes the City Manager to execute all necessary agreements with the ICMA-RC incidental to the administration of the General Employee Plan and Police Officer Plan. PASSED AND ADOPTED by the City Commission of Atlantic Beach this _ day of , 2008. JOHN S. MESERVE Mayor APPROVED AS TO FORM AND CORRECTNESS: ALAN G JENSEN, ESQUIRE City Attorney ATTEST: DONNA L. BUSSEY, CMC City Clerk AGENDA ITEM # 6A MAY 27, 2008 ADMINISTRATIVE SERVICES AGREEMENT Type: 401 /DROP Account Number: 106477 AGENDA ITEM # 6A Plan # 106477 MAY 27' 2ooa ADMINISTRATIVE SERVICES AGREEMENT This Agreement, made as of the day of , 2007 (herein referred to as the "Inception Date"), between The International City Management Association Retirement Corporation ("ICMA-RC"), a nonprofit corporation organized and existing under the laws of the State of Delaware; and City of Atlantic Beach ("Employer") a City organized and existing under the laws of the State of Florida with an office at 800 Seminole Road, Atlantic Beach, Florida 32233. RECITALS Employer acts as a public plan sponsor for a defined benefit retirement plan which contains a distribution option called a deferred retirement option plan ("DROP") with responsibility to obtain investment alternatives and services for employees participating in the DROP; VantageTrust (the "Trust") is a common law trust governed by an elected Board of Trustees for the commingled investment of retirement funds held by state and local governmental units for their employees; ICMA-RC acts as investment adviser to the Trust; ICMA-RC has designed, and the Trust offers, a series of separate funds (the "Funds") for the investment of plan assets as referenced in the Trust's principal disclosure document, "Making Sound Investment Decisions: A Retirement Investment Guide." The Funds are available only to public employers and only through the Trust and ICMA- RC. In addition to serving as investment adviser to the Trust, ICMA-RC provides a complete offering of services to public employers for the operation of employee retirement plans including, but not limited to, communications concerning investment alternatives, account maintenance, account record-keeping, investment and tax reporting, form processing, benefit disbursement and asset management. AGREEMENTS Appointment of ICMA-RC Employer hereby designates ICMA-RC as Administrator of the DROP to perform all non- discretionary functions necessary for the administration of the DROP with respect to assets in the DROP deposited with the Trust. The functions to be performed by ICMA-RC include: (a) allocation in accordance with participant direction of individual accounts to investment Funds offered by the Trust; (b) maintenance of individual accounts for participants reflecting amounts deferred, income, gain, or loss credited, and amounts disbursed as benefits; (c) provision of periodic reports to the Employer and participants of the status of DROP investments and individual accounts; -2- AGENDA ITEM # 6A MAY 27, 2008 Plan # 106477 (d) communication to participants of information regarding their rights and elections under the DROP; and (e) disbursement of benefits as agent for the Employer in accordance with terms of the DROP. 2. Adoption of Trust Employer has adopted the Declaration of Trust of the VantageTrust and agrees to the commingled investment of assets of the DROP within the Trust. Employer agrees that operation of the DROP and investment, management and disbursement of amounts deposited in the Trust shall be subject to the Declaration of Trust, as it may be amended from time to time and shall also be subject to terms and conditions set forth in disclosure documents (such as the Retirement Investment Guide or Employer Bulletins) as those terms and conditions may be adjusted from time to time. It is understood that the term "Employer Trust" as it is used in the Declaration of Trust shall mean this Administrative Services Agreement. 3. Employer Duty to Furnish Information Employer agrees to furnish to ICMA-RC on a timely basis such information as is necessary for ICMA-RC to carry out its responsibilities as Administrator of the DROP, including information needed to allocate individual participant accounts to Funds in the Trust, and information as to the employment status of participants, and participant ages, addresses and other identifying information (including tax identification numbers). ICMA-RC shall be entitled to rely upon the accuracy of any information that is furnished to it by a responsible official of the Employer or any information relating to an individual participant or beneficiary that is furnished by such participant or beneficiary, and ICMA-RC shall not be responsible for any error arising from its reliance on such information. ICMA-RC will provide account information in reports, statements or accountings. 4. Certain Representations. Warranties, and Covenants ICMA-RC represents and warrants to Employer that: (a) ICMA-RC is anon-profit corporation with full power and authority to enter into this Agreement and to perform its obligations under this Agreement. The ability of ICMA-RC to serve as investment adviser to the Trust is dependent upon the continued willingness of the Trust for ICMA-RC to serve in that capacity. (b) ICMA-RC is an investment adviser registered as such with the Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended. ICMA-RC Services, Inc. (a wholly owned subsidiary of ICMA-RC) is registered as abroker-dealer with the Securities and Exchange Commission (SEC) and is a member in good standing of the National Association of Securities Dealers, Inc. -3- AGENDA ITEM # 6A MAY 27, 2008 Plan # 106477 ICMA-RC covenants with employer that: (c) ICMA-RC shall maintain and administer the DROP incompliance with the requirements for plans which satisfy the qualification requirements of Section 401 of the Internal Revenue Code; provided, however, ICMA-RC shall not be responsible for the qualified status of the DROP in the event that the Employer directs ICMA-RC to administer the DROP or disburse assets in a manner inconsistent with the requirements of Section 401 or otherwise causes the DROP not to be carried out in accordance with its terms; provided, further, that if the DROP document used by the Employer contains terms that differ from the terms of ICMA-RC's standardized plan document, ICMA-RC shall not be responsible for the qualified status of the DROP to the extent affected by the differing terms in the Employer's plan document. Employer represents and warrants to ICMA-RC that: (d) Employer is organized in the form and manner recited in the opening paragraph of this Agreement with full power and authority to enter into and perform its obligations under this Agreement and to act for the DROP and participants in the manner contemplated in this Agreement. Execution, delivery, and performance of this Agreement will not conflict with any law, rule, regulation or contract by which the Employer is bound or to which it is a party. Participation in Certain Proceedings The Employer hereby authorizes ICMA-RC to act as agent, to appear on its behalf, and to join the Employer as a necessary party in all legal proceedings involving the garnishment of benefits or the transfer of benefits pursuant to the divorce or separation of participants in the Employer plan. Unless Employer notifies ICMA-RC otherwise, Employer consents to the disbursement by ICMA- RC of benefits that have been garnished or transferred to a former spouse, spouse or child pursuant to a domestic relations order. 6. Compensation and Pa ment (a) DROP Administration Fee. The amount to be paid for plan administration services under this Agreement shall be 0.55% per annum of the amount of DROP assets invested in the Trust. Such fee shall be computed based on average daily net DROP assets in the Trust. (b) Account Maintenance Fee. The annual Account Maintenance Fee for Plan participants will be waived for Employers who use EZLink for contribution processing and submit deposits by wire transfer or ACH. In the event that Employer does not use EZLink for contribution processing and ACH/wire transfer, the annual Account Maintenance Fee shall be $36.00 per Plan participant. If applicable, this fee is payable on the first day of the calendar quarter following establishment and is prorated by reference to the number of calendar quarters remaining on the day of payment. The Account Maintenance fee is debited from each Plan participant's account . -4- AGENDA ITEM # 6A MAY 27, 2008 Plan # 106477 (c) Compensation for Management Services to the Trust; Compensation for Advisory and other Services to The Vantagepoint Funds and Payments from Third-Party Mutual Funds. Employer acknowledges that in addition to amounts payable under this Agreement, ICMA-RC receives fees from the Trust for investment management services furnished to the Trust. Employer further acknowledges that certain wholly owned subsidiaries of ICMA-RC receive compensation for advisory and other services furnished to The Vantagepoint Funds, which serve as the underlying portfolios of a number of Funds offered through the Trust. The fees referred to in this subsection are disclosed in the Retirement Investment Guide. These fees are not assessed against assets invested in the Trust's Mutual Fund Series. In addition, to the extent that third party mutual funds are included in the investment line-up for the Plans, ICMA-RC may receive payments from such third party mutual funds or their service providers, which may be in the form of 12b-1 fees, service fees, or compensation for sub-accounting or other services provided by ICMA-RC on behalf of the funds. (d) Mutual Fund Services Fee. There is an annual charge of 0.15% assessed against average daily net DROP assets invested in the Trust's non-proprietary funds of VantageTrust. (e) Payment Procedures. All payments to ICMA-RC pursuant to this Section 6 shall be paid out of the DROP assets held by the Trust and shall be paid by the Trust. The amount of DROP assets held in the Trust shall be adjusted by the Trust as required to reflect such payments. The compensation and payment set forth in this section 6 is contingent upon the Employer's use of ICMA-RC's EZLink system for contribution processing and submitting contribution funds by ACH or wire transfer on a consistent basis over the term of this Agreement. 7. Custody Employer understands that amounts invested in the Trust are to be remitted directly to the Trust in accordance with instructions provided to Employer by ICMA-RC and are not to be remitted to ICMA-RC. In the event that any check or wire transfer is incorrectly labeled or transferred to ICMA-RC, ICMA-RC will return it to Employer with proper instructions. Responsibility ICMA-RC shall not be responsible for any acts or omissions of any person other than ICMA-RC in connection with the administration or operation of the DROP. 9. Term This Agreement may be terminated without penalty by either party on sixty days advance notice in writing to the other. 10. Amendments and Adiustments -5- AGENDA ITEM # 6A MAY 27, 2008 Plan # 106477 (a) This Agreement may not be amended except by written instrument signed by the parties. (b) The parties agree that an adjustment to administrative and operational services or any reduction in fees under this Agreement may be implemented by ICMA-RC through a proposal to the Employer via correspondence or the Employer Bulletin. (c) No failure to exercise and no delay in exercising any right, remedy, power or privilege hereunder shall operate as a waiver of such right, remedy, power or privilege. 11. Notices All notices required to be delivered under Section 10 of this Agreement shall be delivered personally or by registered or certified mail, postage prepaid, return receipt requested, to (i) Legal Department, ICMA Retirement Corporation, 777 North Capitol Street, N.E., Suite 600, Washington, D.C, 20002- 4240; (ii) Employer at the office set forth in the first paragraph hereof, or to any other address designated by the party to receive the same by written notice similarly given. 12. Com fete Agreement This Agreement shall constitute the sole agreement between ICMA-RC and Employer relating to the object of this Agreement and correctly sets forth the complete rights, duties and obligations of each party to the other as of its date. Any prior agreements, promises, negotiations or representations, verbal or otherwise, not expressly set forth in this Agreement are of no force and effect. 13. Governing Law This agreement shall be governed by and construed in accordance with the laws of the State of Florida, applicable to contracts made in that jurisdiction without reference to its conflicts of laws provisions. -6- AGENDA ITEM # 6A MAY 27, 2008 Plan # 106477 In Witness Whereof, the parties hereto have executed this Agreement as of the Inception Date first above written. CITY OF ATLANTIC BEACH by: Signature/Date Name and Title (Please Print) INTERNATIONAL CITY/COUNTY MANAGEMENT ASSOCIATION RETIREMENT CORPORATION ~, ~~ ~~ r' By Angela C. Montez Assistant Corporate Secretary -7-