HomeMy WebLinkAboutResolution 99-81 - Amendment to City of Huntington Beach Def_ I Council/Agency Meeting HE
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October 4, 1999 Department ID Number: AS 99-023
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL ACTION
SUBMITTED TO:
HONORABLE MAYOR AND CITY COUNCIL MEMBERS
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SUBMITTED BY:
RAY SILVER, City Administrator A f
ma r
PREPARED BY:
John Reekstin, Director of Administrative Services
SUBJECT:
Approve Resolution No.99-8I of the City Council of
the
City of
Huntington Beach Amending the City's Deferred Compensation
Plan --
to Allow Plan Members to Take Loans from the Plan
Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: Should the City amend its Deferred Compensation Plan to allow
employees to take loans from their investment funds?
Funding Source: N/A
Recommended Action: Approve Resolution qL-Ll which will amend the City's Deferred
Compensation Plan.
Alternative Action(s):
Do not approve the resolution and do not allow employees to take out loans against their
Deferred Compensation investments.
Analysis: Recently passed federal legislation allows the City to amend its Deferred
Compensation Plan allowing employees to borrow from their own deferred compensation
plan funds. The City's deferred compensation providers (ICMA and Nationwide) require a
resolution from the City Council allowing the loans.
The City may designate whether or not loans will be allowed for:
1. All purposes.
2. Only on the case of critical need- this would include medical expenses, purchase of
a home, or college education. It would not include car purchases, purchases of
vacation property, or other non -critical items
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Rr-QUEST FOR COUNCIL ACTIuN
MEETING DATE: October 4, 1999 DEPARTMENT ID NUMBER: AS 99-023
Staff is recommending that the loans be made only for #2 above (only in cases of critical
need).
The loans will be subject to the following limitations:
• The loan amount must not exceed $50,000
• The loan amount must not exceed 50% of the amount a participant has in the plan with a
specific provider
• The loan must be repaid within 5 years unless it is for the purchase of a primary residence.
• Participants may receive only one loan per year. The City may elect to restrict participants to
one loan per year or no more than 5 loans outstanding at one time.
Employees will pay loan fees and market -rate interest rates charged by the provider. Employees
are in effect paying interest to themselves. Currently, ICMA is charging an interest rate of prime
plus 0.5%. Repayments will be made through normal payroll deductions. If employees terminate
employment with the City with a loan outstanding, the loan will not be called until the employee
makes a withdrawal of his or her investment.
Although legislation allowing these loans has already passed, the IRS has not issued final
guidelines on the mechanics of these plans. When these regulations are issued, staff does not
expect them to be significantly different than the plan presented. It is highly unlikely that any
changes would be retroactive. However, when employees apply for the loans, they will be notified
of possible changes in IRS policy.
Environmental Status: N/A
Attachment(s):
1 Resolution 9q-9 1 of the City of Huntington Beach Amending it's
Deferred Compensation Plan to Allow Plan Members to Take Loans
from the Plan
RCA Author: Robert Sedlak, Principal Accountant
donoho.doc
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09/22/99 7:32 AM
RESOLUTION NO. 9 9 - R 1
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF HUNTINGTON BEACH AMENDING ITS
DEFERRED COMPENSATION PLAN TO ALLOW PLAN MEMBERS
TO TAKE LOANS FROM THE PLAN
WHEREAS, the City of Huntington Beach has employees rendering valuable
services to it; and
WHEREAS, the City of Huntington Beach has established a Section 457 Deferred
Compensation Plan ("Plan") for its employees which serves the interests of the City of
Huntington Beach 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 of Huntington Beach has determined that permitting
participants in the Plan to take loans from the Plan will serve these objectives;
NOW, THEREFORE, the City Council of the City of Huntington Beach resolves
as follows:
The Plan will permit loans to be applied for and obtained by the Plan's
participants.
2. The qualifications for applying for such loans, and the terms of said loans
(e.g., interest rates, repayment provisions, etc.), shall be established by mutual agreement
between the City of Huntington Beach and the administrator or administrators of the
Plan.
reso/rj w/amndde fcomp/09/08/99
PASSED AND ADOPTED by the City Council of the City of Huntington Beach
at a regular meeting thereof held on the 4th day of October , 1999.
ATTEST:
City Clerk
REVIEWED AND APPROVED:
C y Administrator
Mayor
APPROVED AS TO FORM:
City Attol�
INITIATED AND APPROVED:
1
U ector of Administrative Services
reso/rj w/amndde fcomp/09/08/99
Res. No. 99-81
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of
the City of Huntington Beach, and ex-officio Clerk of the City Council of said City,
do hereby certify that the whole number of members of the City Council of the City
of Huntington Beach is seven; that the foregoing resolution was passed and adopted
by the affirmative vote of at least a majority of all the members of said City Council
at a regular meeting thereof held on the 4th day of October,1999 by the following
vote:
AYES: Julien, Bauer, Garofalo, Green, Dettloff, Harman
NOES: None
ABSENT: Sullivan
ABSTAIN: None
0, 1'q
City Clerk and ex-officio Cl of the
City Council of the City of Huntington
Beach, California
- RCA ROUTING NEET
INITIATING DEPARTMENT:
Adm Svcs
SUBJECT:
Resolution Amending City's Deferred Compensation Plan to
Permit Loans
COUNCIL MEETING DATE:
October 4, 1999
RCA ATTACHMENTS
STATUS
Ordinance (w/exhibits & legislative draft if applicable)
Not Applicable
Resolution (w/exhibits & legislative draft if applicable)
Attached
Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (w/exhibits if applicable)
(Signed in full by the City Attomey)
Not Applicable
Subleases, Third Party Agreements, etc.
(Approved as to form by City Attorney)
Not Applicable
Certificates of Insurance (Approved by the CityAttomey)
Not Applicable
Financial Impact Statement (Unbudget, over $5,000)
Not Applicable
Bonds (If applicable)
Not Applicable
Staff Report (If applicable)
Not Applicable
Commission, Board or Committee Report (If applicable)
Not Applicable
Findings/Conditions for Approval and/or Denial
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED
RETURNED
FORWARDED
Administrative Staff .i Ipoo
( )
RM )
Assistant City Administrator (Initial)
( )
( )
City Administrator (Initial)
( )
( )
City Clerk
( )
EXPLANATION FOR RETURN OF ITEM: