Finance Committee

CITY OF HENDERSONVILLE FINANCE COMMITTEE May 28th, 2024, at 6:00 p.m. 101 Maple Drive North, Hendersonville, TN 37075 I. Call to Order by the Chairman II. Acceptance of agenda III. Minutes A. Approval of April 23, 2024, meeting minutes 2-5 B. Approval of May 13, 2024, special-called meeting minutes 6-7 IV. Public Comments V. Ordinances and Resolutions Clary, and 1. Reading of Ordinance 2024-11, an ordinance to decrease the local option 8-11 Roberson sales tax rate on the purchase of groceries from 2.75% to 2.25% within the corporate limits of Hendersonville Clary 2. Reading of Resolution 2024-25, a resolution adopting a 457(b) Employees 12-29 Deferred Compensation Plan and Trust resolution and Participating Employer Agreement VI. Other Agenda Items 3. Sales Tax Analysis Report (to be provided under separate cover) 4. Hotel-Motel Tax Report (to be provided under separate cover) 5. Investment Earnings Analysis (to be provided under separate cover) 6. Stormwater Report (to be provided under separate cover) 7. Other Business VII. Adjournment Anyone needing accommodations due to disabilities, please contact the ADA Coordinator at 615-822-1016 at least 24 hours prior to the meeting. 1  FINANCE COMMITTEE MEETING MINUTES April 23, 2024 CONFERENCE ROOM 2 @ 6:00 pm Present: Mark Burgdorf, Jeffrey Sasse Absent: Karen Dixon Others Present: Mayor Jamie Clary, Jesse Eckenroth, Tamara Ingersoll, Andy Gilley, Chief Bush, George Edwards, Terri Goodwin, Janna Garton, Bob Garza, Rachel Collins Called to order at 6:00 pm Motion to Accept the April 23, 2024, Finance Committee Agenda Motion: Jeffrey Sasse Second: Mark Burgdorf Vote: Approved unanimously 2-0 Motion to Approve the February 27, 2024, Finance Committee Meeting Minutes Motion: Jeffery Sasse Second: Mark Burgdorf Vote: Approved unanimously 2-0 Citizens’ Comments David Moomy spoke in support of Ordinance 2024-07 to increase paramedic pay for public safety employees. Ordinances and Resolutions Reading of Ordinance 2024-07, an ordinance amending Hendersonville Municipal Code Title 4, Chapter 3, Section 4-303(4), relative to increasing paramedic certification pay for public safety employees Discussion: Rachel Collins discussed that fire often has a shorter response time than the ambulance service. The training to become a paramedic takes two years. This increase in paramedic pay would be incentive for additional firefighters to obtain the paramedic certification resulting in a higher level of service to the community. She also noted that this may also help attract more applicants when recruiting for vacant positions. The City currently has 8 employees that receive this pay. Mark Burgdorf indicated that the City recently approved Fire to apply for a grant that would fund 80% of the cost for paramedic training. Only one firefighter has indicated interest in attending the paramedic training. Bob Garza, Terri Goodwin and Janna Garton requested to be co-sponsors on this ordinance. 2 Jeff Sasse voiced his support of this ordinance. Motion to move Ordinance to BOMA with positive recommendation with the condition that it be included in the FY2025 budget: Jeffrey Sasse Second: Mark Burgdorf Vote: Approved unanimously 2-0 Reading of Resolution 2024-17, a resolution to apply for the Local Parks and Recreation Fund Grant for Heritage Park Discussion: Andy Gilley explained the City is finishing an existing LPRF grant project with the completion date scheduled for May 15th. The State only allows one LPRF project at a time and the application deadline for this new grant is May 22nd. This grant is a 50/50 match grant and that the City’s 50% match can be met by using the value of the land, estimated value of land is $3.38 million. Completion of this project would not have a financial impact on the General Fund. The City would have to put a Notice of Limitation of Use on the property designation the property as park in perpetuity. Alderman Sasse asked about ongoing maintenance costs of this location and voiced some concerns about the potential operational costs. Andy Gilley indicated that mowing would be necessary as well as cleaning restrooms and other items. Motion to move Resolution to BOMA with a neutral recommendation: Jeffrey Sasse Second: Mark Burgdorf Vote: Approved unanimously 2-0 Reading of Resolution 2024-18, a resolution to apply for the State of Tennessee Recreational Trails Program Grant to fund a bicycle pump track in Veteran’s Park Discussion: Andy Gilley explained that this State grant is a 80/20 grant and that the City’s 20% match has already been raised by community bicycle groups and the Rotary. The deadline to apply for this grant is May 22nd. Alderman Sasse asked about liability and cost of insurance. Staff indicated that the increase in insurance costs would be minimal. Public Entity Partners typically does an assessment of properties as they come on line. Motion to move Resolution to BOMA with a positive recommendation: Jeffrey Sasse Second: Mark Burgdorf Vote: Approved unanimously 2-0 Other Agenda Items 3 Sales Tax Analysis State Sales Tax Analysis – Sales tax for the month of March 2024 totaled $593,253. This represents a $37,629 increase compared to March 2023, and a $195,689 increase compared to this point in FY2023. Local Sales Tax Analysis – Sales tax for the month of February 2024 totaled $1,553,643. This represents a $42,195 increase compared to February 2023, and a $616,397 increase compared to this point in FY2023. Hotel-Motel Tax Analysis Hotel Motel Tax Analysis – Tax collections for the month of March 2024 totaled $36,187.88. This represents a $2,738.28 increase compared to March 2023, and a $60,480.21 increase compared to this point in FY2023. The revenues coming into this fund are expected to be low for the next several months as one of the hotels was damaged in the December 9, 2023 tornado. Investment Activity The City of Hendersonville’s interest earnings for the month of March 2024 was $156,935. The total investment earnings year-to-date for FY24 is $1,175,120. Stormwater Fund Report The current balance in the Stormwater Fund is $1,749,523. The majority of the revenues for the Stormwater Fund are received between November and February as they are billed and paid with property taxes. Discussion: FY2025 Budget Jesse Eckenroth and Tamara Ingersoll presented a slide show. Changes include: Creation of a trash disposal fund, trash fee component and reduction of property tax in the General Fund to be revenue neutral, minor operating revenue and expenditure adjustments, added details to the Public Safety, infrastructure, Paving and Parks (PIPP) Fund, added details to the asset lines indicating what is being budgeted. Revenues: $6 million (disposal service cost of $4.4 million to Waste Pro for trash collection and $1.6 million for the tipping fees) was reduced out of property taxes and moved to the new trash disposal fund as a trash fee, and other minor adjustments. Reviewed and discussed the FY25 proposed General Fund budget priorities. Reviewed and discussed the FY25 proposed General Fund budget priorities. There are no new positions added to the budget for any department. A 3% Cost of Living Adjustment is being proposed. The presentation included an overview of the operating budget. 4 There will be a Non-Operating Budget Workshop on May 2, 2024 at City Hall and that is when projects will be discussed. Motion to Adjourn Motion: Jeffery Sasse Second: Mark Burgdorf Vote: Approved unanimously 2-0 Adjourned 7:01 pm ______________________________ Karen Dixon, Chairwoman 5  SPECIAL CALLED FINANCE COMMITTEE MEETING MINUTES May 13, 2024 CONFERENCE ROOM 2 @ 5:30pm Present: Karen Dixon, Mark Burgdorf Absent: Jeffrey Sasse Others Present: Mayor Jamie Clary, Jesse Eckenroth, Tamara Ingersoll, Chief Bush, George Edwards, Terri Goodwin, Bob Garza, Michael Martin Called to order at 5:32 pm Motion to Accept the May 13, 2024, Special Called Finance Committee Agenda Motion: Mark Burgdorf Second: Karen Dixon Vote: Approved unanimously 2-0 Citizens’ Comments None. Ordinances and Resolutions Reading of Ordinance 2024-08, an ordinance of the City of Hendersonville, Tennessee adopting the annual budget and tax rate for the fiscal year beginning July 1, 2024, and ending June 30, 2025 Discussion: The ordinance as written does not include the new tax rate as the City is waiting for the new rate to be finalized. The ordinance will have to be amended at BOMA to update the tax rate. This will not impact the dollars budgeted, just the tax rate. Staff summarized the changes that have been made to the budget since the second budget workshop. These changes include: • The addition of $25,000 for a project at Fire Station #3 for foundation repairs. The foundation is settling and this is not covered by insurance. • The addition of $67,000 for increased health benefit costs. • An update in the Hotel Motel Fund to adjust the amount for Rock Castle from $35,000 to $30,000 to align with the recommendation of the Non-Profit Committee. • The deletion of $12,500 for Beautiful Hendersonville for pumps and wreaths on the bridge as the purchase order for this work will be issued in FY2024. The Mayor indicated that an amendment may be needed to cover some of the storm related expenses that would utilize some of the surplus. Staff confirmed that there is roughly $105,000 in surplus in the operational budget being presented. 6 Jesse Eckenroth explained that there is a new chart included in the budget packet that shows the staffing by department. This reflects the staffing that is budgeted. Motion to move Ordinance to BOMA with no changes: Karen Dixon Second: Mark Burgdorf Vote: Approved unanimously 2-0 Motion to Adjourn Motion: Mark Burgdorf Second: Karen Dixon Vote: Approved unanimously 2-0 Adjourned 5:41 pm ______________________________ Karen Dixon, Chairwoman 7  ORDINANCE 2024-11 Sponsors: Clary and Roberson AN ORDINANCE TO DECREASE THE LOCAL OPTION SALES TAX RATE ON THE PURCHASE OF GROCERIES FROM 2.75% TO 2.25% WITHIN THE CORPORATE LIMITS OF HENDERSONVILLE WHEREAS, on November 14, 2023, this governing body passed Ordinance 2023-20 (“The Hendersonville Investment In the Future Act”), requesting its citizens to determine by referendum whether to increase the City’s local option sales tax by ½ penny (from 2.25% to 2.75%) over the next ten (10) years; WHEREAS, at such time, the City desired to make groceries exempt from any such local option sales tax rate increase, however, at that time the City had no authority under state law to do so; thus, in its Ordinance 2023-20, the City forwarded a formal request to its State delegates for passage by the Tennessee General Assembly to change state law granting cities the authority to decrease the local option sales tax rate on groceries; WHEREAS, on March 5, 2024, the citizens of the City of Hendersonville showed significant support for, and voted to approve increasing the City’s local option sales tax rate from 2.25% to 2.75%, which shall terminate (“Sunset”) after ten (10) years; WHEREAS, on April 18, 2024, the General Assembly passed Public Chapter No. 917, amending state law to now allow cities to decrease its local option sales tax rate on groceries; WHEREAS, “groceries” are defined under state law as “the retail sale of food and food ingredients for human consumption”: WHEREAS, the City desires that such groceries be exempt from the increase to its local option sales tax, to terminate (“Sunset”) after ten (10) years, consistent with the City’s local option sales tax increase: NOW, THEREFORE, BE IT ORDAINED BY THE BOARD OF MAYOR AND ALDERMEN OF THE CITY OF HENDERSONVILLE, TENNESSEE as follows: Section One. Under the new authority of State of Tennessee Public Chapter No. 917, the City’s local option sales tax rate for groceries (defined by state law under Tennessee Code Annotated, § 67-6-228 as the retail sale of food and food ingredients for human consumption), shall be decreased from 2.75% to 2.25%. Section Two. This local option sales tax rate decrease shall terminate (“Sunset”) on the tenth (10th) year anniversary of the date such sales tax decrease begins collection, as allowed pursuant to Tennessee Code Annotated, § 67-6-708. Section Three. This Ordinance shall not affect the City’s local option sales tax on purchases for which was unchanged by state law and defined under Tennessee Code Annotated, § 67-6-228(b), as the retail sale of food and food ingredients sold as prepared food, alcoholic beverages, candy, dietary supplements and tobacco. Section Four. This ordinance shall take effect upon becoming law, both at the State level and the local level. 8 First Reading: ___________________________ Second Reading: ___________________________ APPROVED: __________________________ ATTEST: JAMIE CLARY, Mayor __________________________________ TAMARA INGERSOLL, City Recorder APPROVED AS TO FORM AND LEGALITY: _________________________________ LANCE A. WRAY, City Attorney 9  LEGISLATIVE HISTORY Ordinance 2024-11 Sponsors: Clary and Roberson Committee: Finance Date of Committee Meeting: May 28th, 2024 Committee Recommendation: 10 DATE: May 28th, 2024 ORDINANCE/RESOLUTION # Ordinance 2024-11 That the BOMA decrease the local option sales tax rate on the SPECIFIC REQUEST/ purchase of groceries from 2.75% to 2.25% within the RECOMMENDATION: corporate limits of Hendersonville STAFF Jamie Clary - Mayor REPORT PREPARED BY: Jesse Eckenroth – Chief of Operations REPORT Tamara Ingersoll – Finance Director BACKGROUND: 1 By way of referendum, the Hendersonville voters passed the Hendersonville Investment in the Future Act, a ½ cent sales tax increase. The ½ cent increase raises the city’s sales tax rate from 2.25% to 2.75%, for a total sales tax rate (city and state) from 9.25% to 9.75% and expires “sunsets” in 10 years. The new sales tax rate goes into effect June 1, 2024. The city sales tax increase applies uniformly to all taxable items, including groceries. However, the Board of Mayor and Alderman expressed a desire to exempt groceries from the sales tax increase, subsequently the General Assembly passed legislation allowing local government agencies to lower sales tax on groceries. DISCUSSION: 2 Sales tax on groceries is comprised of two rates, the state rate of 4% and the local/city rate of 2.25%, for a total rate of 6.25%. The new legislation gives the city authority to exempt the ½ cent sales tax increase from the sale of groceries, meaning groceries could stay at the current taxable rate of 6.25%. The state administers and collects sales tax on behalf of all the cities in the state. If BOMA elects to exempt groceries from the ½ cent sales tax the city will forward an official request to the state to lower the taxable rate for grocery items. Adjusting the sales tax rate requires the state to go through a process of notifying impacted businesses. Impacted businesses are given a window of time to adjust their sales tax collection rates at the point of purchase before the requirement goes into effect, which could become effective as early as October 1, 2024. FISCAL IMPACT: 3 The city currently receives 1.125% or half of the 2.25% local sales tax rate; Sumner County receives the other half or 1.125% of the local sales tax rate. The ½ cent increase portion, however, will go 100% to the city. The collection rate of the city will move from 1.125% to 1.625% or approximately 44% more than the current collection rate. Local sales tax accounts for approximately $21 million in the FY25 Budget, a 44% increase is approximately $9 million dollars. The FY25 Budget added a fund, the PIPP Fund, that independently tracks all revenue and expenditures from the ½ cent sales tax revenue. The PIPP Fund was conservative in estimating revenue and only assumed $8,200,000 for FY25. Throughout the year city staff will monitor the actual revenues of the PIPP Fund and make recommendations, if needed, during the mid-year budget process. At this point no budget amendments are requested. ATTACHMENTS: 4 1. Ordinance 2024-11 11  RESOLUTION 2024-25 Sponsor: Clary A RESOLUTION ADOPTING A 457(b) EMPLOYEES DEFERRED COMPENSATION PLAN AND TRUST RESOLUTION AND PARTICIPATING EMPLOYER AGREEMENT Cover Sheet Attachments: 1. Resolution document provided by the State of Tennessee 2. City of Hendersonville Legislative History 3. Staff Summary Report 12  TENNESSEE STATE EMPLOYEES DEFERRED COMPENSATION PLAN AND TRUST - 457(b) RESOLUTION AND PARTICIPATING EMPLOYER AGREEMENT City of Hendersonville _____________________________ [Participating Employer] Administered by: Treasurer, State of Tennessee 502 Deaderick Street, 15th Floor Andrew Jackson State Office Building Nashville, Tennessee 37243 Telephone: 615-532-2347 13  RESOLUTION WHEREAS, City of Hendersonville , Tennessee (hereinafter referred to as the "Employer") has determined that in the interest of attracting and retaining qualified employees, it wishes to offer a governmental 457(b) deferred compensation plan, funded by employee deferrals and, if elected pursuant to Section I and/or K of the Participating Employer Agreement, employer contributions; WHEREAS, Tennessee Code Annotated, Section 8-25-111(a) allows a Tennessee local governmental entity to participate in the State of Tennessee's 457(b) deferred compensation plan subject to the approval of the Chair of the Tennessee Consolidated Retirement System (hereinafter referred to as the "Chair"); WHEREAS, the liability for participation and the costs of administration shall be the sole responsibility of the Employer and/or its employees, and not the State of Tennessee; WHEREAS, the Employer has also determined that it wishes to encourage employees' saving for retirement; WHEREAS, the Employer has reviewed the Tennessee State Employees Deferred Compensation Plan and Trust Adoption Agreement for a Section 457(b) Eligible Deferred Compensation Plan for Governmental Employers, as adopted by the State of Tennessee, as amended and restated effective December 22, 2010, and as amended by Amendment Number One signed December 22, 2010, Amendment Number Two signed February 8, 2012, Amendment Number Three signed February 26, 2015 and Amendment Number Four signed September 26, 2016 as well as the Section 457(b) Eligible Deferred Compensation Plan for Governmental Employer Basic Plan Document (collectively known as the "Plan" or "Plan Document"); WHEREAS, the Employer wishes to provide certain benefits to its employees, reduce overall administrative costs, and afford attractive investment opportunities; WHEREAS, the Employer is eligible to become a Participating Employer in the Plan, pursuant to Article XVII of the Plan Document; WHEREAS, the Employer is concurrently executing a Participating Employer Agreement for the Plan; and WHEREAS, the Board of Mayor and Alderman ("Governing Authority") of the Employer is authorized by law to adopt this resolution approving the Participating Employer Agreement on behalf of the Employer; NOW, THEREFORE, the Governing Authority of the Employer hereby resolves: 1. The Employer adopts the Plan Document for its Employees; provided, however, that for the purpose of the Plan, the Employer shall be deemed to have designated irrevocably the Chair as its agent, except as otherwise specifically provided herein or in the Participating Employer Agreement. 2. The Employer acknowledges that the Plan does not cover, and the Trustees of the Plan ("Trustees") have no responsibility for, other employee benefit plans maintained by the Employer. 1 08-2017 State of Tennessee Deferred Compensation Plan I for Participating Governmental Employers 14 3. The Employer acknowledges that it may not provide employer contributions to the Plan on behalf of any of its employees that exceed three percent (3%) of the respective employees' salary if the employees are members of the Tennessee Consolidated Retirement System (“TCRS”) or of any other retirement program financed from public funds whereby such employees obtain or accrue pensions or retirement benefits based upon the same period of service to the Employer, unless such employees are members of TCRS’ local government hybrid plan established under Tennessee Code Annotated, Section 8-35-256 or TCRS’ State hybrid plan established under Tennessee Code Annotated, Title 8, Chapter 36, Part 9. If such employees participate in either of the hybrid plans, the total combined amount of employer contributions to the Plan and to any one or more additional defined contribution plans may not exceed seven percent (7%) of the respective employee’s salary. In no instance shall the total combined employer contributions to all defined contribution plans on behalf of a single employee exceed the maximum allowed under the Internal Revenue Code (“Code”), and shall conform to all applicable laws, rules and regulations of the Internal Revenue Service (“IRS”) governing profit sharing and/or salary reduction plans for governmental employees. 4. The Employer hereby adopts the terms of the Participating Employer Agreement, which is attached hereto and made a part of this resolution. The Participating Employer Agreement (a) permits all employees of the respective entity to make elective deferrals; (b) sets forth the Employees to be covered pursuant to Section I and/or K of the Participating Employer Agreement for employer contributions, if any; (c) outlines the benefits to be provided by the Participating Employer under the Plan; and, (d) states any conditions imposed by the Participating Employer with respect to, but not inconsistent with, the Plan. The Participating Employer reserves the right to amend its elections under the Participating Employer Agreement, so long as the amendment is not inconsistent with the Plan, the Code, Tennessee law, or other applicable law and is approved by the Chair. 5. The Chair may amend the Plan on behalf of all Employers, including those Employers who have adopted the Plan prior to a restatement or amendment of the Plan, for changes in the Code, the regulations thereunder, Tennessee law, revenue rulings, other statements published by the Internal Revenue Service ("IRS"), including model, sample, or other required good faith amendments, and for other reasons that are deemed at the Chair's sole discretion to be in the interest of the Plan. These amendments shall be automatically applicable to all Employers. 6. The Chair will maintain, or will have maintained, a record of the Employers and will make reasonable and diligent efforts to ensure that Employers have received all Plan amendments. 7. The Employer shall abide by the terms of the Plan, including amendments to the Plan and Trust made by the Chair, all investment, administrative, and other service agreements of the Plan, and all applicable provisions of the Code, Tennessee law, and other applicable law. 8. The Employer accepts the administrative services to be provided by the Tennessee Treasury Department and any services provided by Plan vendors. The Employer acknowledges that fees will be imposed with respect to the services provided and that such fees may be deducted from the Participants' Accounts and/or charged to the Employer. 9. Subject to the provisions of Section 17.06 of the Plan, the Employer may terminate its participation in the Plan, including but not limited to, its contribution requirements pursuant to the Plan, if it takes the following actions: 2 08-2017 State of Tennessee Deferred Compensation Plan I for Participating Governmental Employers 15  a. A resolution must be adopted by the Governing Authority of the Employer terminating the Employer's participation in the Plan. b. The resolution must specify the proposed date when the participation will end, which must be at least six calendar months after notice to the Chair and the Employer's employees. c. The Chair shall (i) determine whether the resolution complies with the Plan, and all applicable federal and state laws, (ii) determine an appropriate effective date, and (iii) provide appropriate forms to terminate ongoing participation. Distributions under the Plan of existing accounts to Participants will be made in accordance with the Plan Document. d. Once the Chair determines the appropriate effective date, the Employer shall immediately notify all its Employees participating in the Plan of the termination and the effective date thereof. e. The Chair can, in the Chair's sole discretion, reduce the six month notice and withdrawal period to a shorter period if the Employer so requests, but in no event shall the period be less than three months. 10. The Employer acknowledges that the Plan Document contains provisions for Plan termination by the Trustees, subject to applicable Tennessee law. 11. The Employer acknowledges that all assets held in connection with the Plan, including all contributions to the Plan, all property and rights acquired or purchased with such amounts and all income attributable to such amounts, shall be held in trust for the exclusive benefit of Participants and their Beneficiaries under the Plan. No part of the assets and income of the Plan shall be used for, or diverted to, purposes other than for the exclusive benefit of Participants and their Beneficiaries and for defraying reasonable expenses of the Plan. All amounts of compensation deferred pursuant to the Plan, all property and rights acquired or purchased with such amounts and all income attributable to such amounts, property or rights held as part of the Plan, shall be transferred to the Trustees to be held, managed, invested and distributed as part of the Trust Fund in accordance with the provisions of the Plan. All contributions to the Plan must be timely transferred by the Employer to the Trust Fund pursuant to and in the manner provided by the Chair. The Employer acknowledges that if the Employer fails to remit the requisite contributions in a timely manner, the Chair reserves the right, at the Chair's sole discretion, to terminate the Employer's participation in the Plan. In such event, the Chair shall notify the Employer of the effective termination date, and the Employer shall immediately notify all its employees participating in the Plan of the termination and the effective date thereof. Notwithstanding the foregoing, the Employer acknowledges that it is the sole responsibility of the Employer to remit the requisite reports and contributions to the Plan and that neither the State, the Chair, the Trustees, its employees, or agents shall have any responsibility or liability for ensuring or otherwise monitoring that this is done. All benefits under the Plan shall be distributed solely from the Trust Fund pursuant to the Plan. 12. The Employer agrees to offer and enroll only those persons, whether appointed, elected, or under contract, wherein an employee-employer relationship is established, providing service to the Employer for which compensation is paid by the Employer. 3 08-2017 State of Tennessee Deferred Compensation Plan I for Participating Governmental Employers 16 13. The Employer understands that IRS rules and Tennessee law limit participation in the Plan to governmental entities and their respective employees. The Employer will notify the Chair in writing within ten (10) calendar days if it ceases to be a governmental entity under applicable federal or Tennessee law, and/or if it discovers that it is transferring or having transferred employee deferrals and/or employer contributions to the Plan on behalf of an individual who does not meet the requirements in Paragraph 12 above. 14. The Employer acknowledges that the Chair and other Trustees are the fiduciaries of the Plan and have sole and exclusive authority to interpret the Plan and decide all claims and appeals for Plan benefits. The Employer agrees to abide by the Chair's decisions on all matters involving the Plan. 15. This resolution and the Participating Employer Agreement shall be submitted to the Chair for approval. The Chair shall determine whether the resolution and the Agreement comply with the Plan, and, if they do, shall provide appropriate forms to the Employer to implement participation in the Plan. The Chair may refuse to approve a Participating Employer Agreement executed by an Employer that, in the Chair's sole discretion, does not qualify to participate in the Plan. 16. The Governing Authority hereby acknowledges that it is responsible to assure that this resolution and the Participating Employer Agreement are adopted and executed in accordance with the requirements of applicable law. Adopted by the Governing Authority on _________________________, _______, in accordance with applicable law. By: Signature Printed Name Title Attest: Date: [Governing Authority must assure that applicable law is followed in the adoption and execution of this resolution.] 4 08-2017 State of Tennessee Deferred Compensation Plan I for Participating Governmental Employers 17  TENNESSEE STATE EMPLOYEES DEFERRED COMPENSATION PLAN AND TRUST - 457(b) PARTICIPATING EMPLOYER AGREEMENT A. PARTICIPATING EMPLOYER INFORMATION Name: City of Hendersonville NOTE: A Participating Employer Agreement must be completed for each employer. For example, if a city has separate legal entities for the city and a utility company – each would need to complete their own Participating Employer Agreement in order to participate. However, divisions of the same employer (e.g., finance, HR, departments, etc.) do not need to complete and should not complete separate agreements. (1) GOVERNING AUTHORITY Name: Board of Mayor and Alderman Address: 101 Maple Drive N, Hendersonville TN 37075 Phone: 615-590-4629 Person Authorized to receive Official Notices from the Plan or Administrator: Jason Gallo (2) PARTICIPATING EMPLOYER TAX ID NUMBER: 62-0809182 (3) DISCLOSURE OF RETIREMENT PLAN(S) [INCLUDING, IF APPLICABLE, PARTICIPATION IN THE TENNESSEE CONSOLIDATED RETIREMENT SYSTEM (“TCRS”)] This Participating Employer [✔] does or [ ] does not have an existing deferred compensation or retirement plan. If the Participating Employer does have one or more deferred compensation plans or retirement plans (including TCRS), the Governing Authority must provide in the space below the plan name, name and telephone number of the provider, and such other information requested by the Administrator. Voya 457 TCRS Legacy and State of TN 401(k) B. TYPE OF ADOPTION AND EFFECTIVE DATE NOTE: This Participating Employer Agreement ("Agreement"), with the accompanying Plan, is designed to comply with Internal Revenue Code ("Code") Section 457(b), as applicable to a governmental plan. 5 08-2017 State of Tennessee Deferred Compensation Plan I for Participating Governmental Employers 18  By adopting this Participating Employer Agreement, with its accompanying Resolution, the Participating Employer is adopting a Plan Document intended to comply with Code Section 457(b). This Agreement is for the following purpose: (Check and complete box 1 OR box 2 OR box 3.) 1. [✔] This is a new 457(b) deferred compensation plan adopted by the Participating Employer for its Employees effective _________________, September 1 _____ 2024 (insert effective date of this Agreement). 2. [ ] This is an amendment to be effective as of , , to the current Agreement previously adopted by the Participating Employer, which was originally effective _____________________, _____, as follows (please specify type below): a. [ ] This is an amendment to change one or more of the Participating Employer's contribution elections in the existing Participating Employer Agreement. b. [ ] Other (must specify elective provisions in this Agreement that are being changed): ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 3. [ ] This is an amendment and restatement of another 457(b) deferred compensation plan of the Participating Employer, the effective date of which shall be __________________, ______ (insert effective date of this Agreement). This Agreement is intended to replace and serve as an amendment and restatement of the Participating Employer's preexisting plan, which became effective on __________________, ______ (insert original effective date of preexisting plan). The Participating Employer understands that it is the Participating Employer's responsibility to ensure that the preexisting plan met all applicable state and federal requirements. C. PLAN YEAR. Plan Year shall mean the calendar year. D. CUSTODY OF ASSETS. Code § 457(g) shall be satisfied by setting aside Plan assets for the exclusive benefit of Participants and Beneficiaries, in a Trust pursuant to the provisions of Article VII of the Plan. The Trustees for the Plan are also the Trustees for the separate accounts for each participating employer. E. ELIGIBLE EMPLOYEES. 1. "Employee" shall mean, for purposes of making Elective Deferrals, any person, whether appointed, elected or under contract wherein an employee-employer relationship is established, providing services to the Participating Employer for which Compensation is paid by the Participating Employer. Any other individual who is a subcontractor, contractor, or employed by a subcontractor or contractor, or is under any other similar arrangement wherein an employer-employee relationship is not established will not be treated as an Employee. An Employee is immediately eligible to make Elective Deferrals under the Plan. 6 08-2017 State of Tennessee Deferred Compensation Plan I for Participating Governmental Employers 19 2. a. "Employee" shall mean for purposes of Matching Contributions as described in Section I of this Agreement: (Check and complete each box that applies. If no Matching Contributions will be made, do not complete.) i. [ ] any full-time employee, which is an employee who renders _____ or more Hours of Service per week, as defined in Section G below ii. [ ] any permanent part-time employee, which is an employee who is not a full-time employee and who renders ____ or more Hours of Service per week, as defined in Section G below iii. [ ] any seasonal, temporary or similar part-time employee iv. [ ] any elected or appointed official v. [ ] any employee in the following class(es) of employees: who meets the definition in Section E.1 above, regardless of the Employee's age or the number of years of service the Employee has rendered to the Employer. All Matching Contributions made on behalf of such Employees are 100% vested immediately, expect as provided in Section F.2.b below. b. "Employee" shall mean for purposes of Non-Matching Contributions as described in Section K of this Agreement: (Check and complete each box that applies. If no Non-Matching Contributions will be made, do not complete.) i. [ ] any full-time employee, which is an employee who renders _____ or more Hours of Service per week, as defined in Section G below ii. [ ] any permanent part-time employee, which is an employee who is not a full-time employee and who renders ____ or more Hours of Service per week, as defined in Section G below iii. [ ] any seasonal, temporary or similar part-time employee iv. [ ] any elected or appointed official v. [ ] any employee in the following class(es) of employees: 7 08-2017 State of Tennessee Deferred Compensation Plan I for Participating Governmental Employers 20  vi. [ ] any employee listed or otherwise described in Schedule 1 attached to this Agreement who meets the definition in Section E.1 above, regardless of the Employee's age or the number of years of service the Employee has rendered to the Employer. All Non-Matching Contributions made on behalf of such Employees are 100% vested immediately. F. AUTOMATIC ENROLLMENT. (Check and complete box 1 OR box 2.) 1. [✔] The Participating Employer DOES NOT elect automatic enrollment. 2. [ ] The Participating Employer DOES elect automatic enrollment, which will be effective for Plan Years beginning on and after January 1, _______ as follows: a. Employees covered under the automatic enrollment are: (If this Section F (Automatic Enrollment) is elected, check one option below. Otherwise, do not complete.) i. [ ] All Employees. ii. [ ] All Employees who become Employees on or after the date set forth in Section F.2. above and who do not have an affirmative election in effect. b. The default percentage contributed to the Plan on behalf of the Participant will be a deferral of 2% of the Participant's Compensation. The 2% default percentage will be subject to a percentage annual increase thereafter if provided for in the Plan Document. Any deferral percentage increase will take effect annually on the first day of the Plan Year. Participants’ default deferrals will remain at the same percentage for at least twelve (12) months before their automatic deferral percentages will be increased automatically. The automatic deferrals will be contributed on a pre-tax basis and will continue until the Participant affirmatively elects otherwise. An Employee who affirmatively declines coverage after the first automatic enrollment contribution was made, may make an election to withdraw his or her entire automatic enrollment contribution. This election must be submitted no later than 90 days after the payroll date in which the first automatic enrollment contribution is made on behalf of the Participant. The amount of the distribution will be the value of the automatic enrollment contributions plus or minus investment gains or losses as of the date the distribution is processed. Automatic enrollment contributions made after such date remain in the Plan and are subject to the Plan's regular distribution rules. Further, an Employee who has made an election to withdraw who leaves employment and is then rehired by the Participating Employer before a 12-continuous- month absence may not make another election to withdraw his or her automatic enrollment contribution. Any Employer Matching Contributions attributable to the distribution of the automatic enrollment contributions will be forfeited and used for the purposes set forth in Section O below. 8 08-2017 State of Tennessee Deferred Compensation Plan I for Participating Governmental Employers 21  c. An Employee who leaves employment and is rehired by the Participating Employer before a 12- continuous-month absence has occurred will be treated as subject to the automatic contribution schedule. An Employee who leaves employment and is rehired by the Participating Employer after a 12-continuous-month absence: (Check one option below.) i. [ ] will be treated as a new Employee, or ii. [ ] will not be treated as a new Employee for purposes of determining the Employee's contribution rate in Section F.2.b above. G. HOURS OF SERVICE. Hours of Service shall be determined on the actual hours for which an Employee is paid or entitled to payment. H. COMPENSATION DEFINITION. Compensation means all cash compensation for services to the Employer, including salary, wages, fees, commissions, bonuses and overtime pay, that is includible in the Employee's gross income for the calendar year, plus amounts that would be cash compensation for services to the Employer includible in the Employee's gross income for the calendar year but for a compensation reduction election under Code §§ 125, 132(f), 401(k), 403(b), or 457(b) (including an election to defer compensation under Article III of the Plan). If elected below and to the extent permitted by the Treasury regulations or other similar guidance (including, without limitation, the requirements contained in Treasury Regulations §§ 1.457-4(d)(1) and 1.415-2(e)(3)(i)), “compensation” also means accrued bona fide sick, vacation or other leave payable after severance from employment so long as the Participant would have been able to use the leave if employment had continued and it is paid within the longer of two and one-half (2½) months after the Participant severs employment with the Employer or the end of the calendar year in which the Participant severs employment with the Employer. The Participating Employer: 1. [✔] SHALL allow the deferral of leave provision described above. 2. [ ] SHALL NOT allow the deferral of leave provision described above. I. MATCHING CONTRIBUTIONS. (Check and complete box 1 OR box 2 OR box 3 OR box 4.) [NOTE: Any Matching Contribution will reduce, dollar for dollar, the amount a Participant can contribute.] The Participating Employer shall: 1. [✔] NOT make Matching Contributions. 2. [ ] match ___% of Participant elective deferrals of up to ___% of Compensation. 3. [ ] match ___% of the first $_____ of Participant elective deferrals. 4. [ ] match the percentage of Participant elective deferrals that the Employer determines in its discretion for the respective Plan Year. 9 08-2017 State of Tennessee Deferred Compensation Plan I for Participating Governmental Employers 22  If the Participating Employer elects Automatic Enrollment under Section F.2., Matching Contributions related to the distributed permissible withdrawal election will be placed in a forfeiture account and used in the manner provided in Section O below. Matching Contributions will not be made if a permissible withdrawal is taken before the date the Matching Contribution is allocated. J. ALLOCATION OF MATCHING CONTRIBUTIONS. If Matching Contributions will be made, allocations will be made to each Participant who satisfies the requirements of Section E.2.a. of this Participating Employer Agreement. K. NON-MATCHING CONTRIBUTIONS. (If non-matching contributions will be made, check box 1 OR box 2.) [NOTE: Any Non-Matching Contribution will reduce, dollar for dollar, the amount a Participant can contribute.] 1. [✔] The Participating Employer shall NOT make Non-Matching Contributions. 2. [ ] The Participating Employer shall contribute: (Check and complete one box.) a. [ ] an amount fixed by appropriate action of the Employer. b. [ ] ___% of Compensation of Participants for the Plan Year. c. [ ] $____ per Participant. d. [ ] an amount pursuant to Schedule 1 attached to this Agreement and which is referenced in Section E.2.b above. e. [ ] a contribution matching the Participant's contribution to the Employer's § 457(b) plan as follows: (Specify rate of match and time of allocation, e.g., payroll by payroll, monthly, last day of Plan Year.) __________________________________________________________ __________________________________________________________ L. ALLOCATION OF NON-MATCHING CONTRIBUTIONS. If Non-Matching Contributions will be made, allocations will be made to each Participant who satisfies the requirements of Section E.2.b of this Participating Employer Agreement. M. ROTH CONTRIBUTIONS. Participant Roth Contributions SHALL NOT BE allowed. N. AFTER-TAX CONTRIBUTIONS. Participant After-tax Contributions are not permitted in a 457(b) Plan and, accordingly, SHALL NOT BE allowed. O. FORFEITURES. Forfeitures of Matching Contributions, as provided in Section F.2.b, will be used first to reduce the Employer's Matching Contributions (if any), then to reduce the Non-Matching Contributions (if any), and then to offset Plan expenses. P. NORMAL RETIREMENT AGE. Normal Retirement Age shall mean age 70½. 10 08-2017 State of Tennessee Deferred Compensation Plan I for Participating Governmental Employers 23 Q. ROLLOVERS. Rollovers from eligible Code § 457(b) plans, qualified plans under Code §§ 401(a), 403(a) and 403(b), Individual Retirement Accounts and Annuities described in Code §§ 408(a) and (b) SHALL BE allowed pursuant to Section 6.01 of the Plan. However, a direct rollover from an eligible plan under Code § 457(b), 401(k) or 403(b) shall exclude any portion of a designated Roth account. A rollover contribution that is a Participant rollover from an eligible plan under Code Section 457(b), 401(k), or 403(b) shall exclude distributions of a designated Roth account. R. TRANSFERS. Transfers from other 457(b) plans SHALL BE allowed. If a Participant is also a participant in a tax-qualified defined benefit governmental plan (as defined in Code § 414(d)) that provides for the acceptance of plan-to-plan transfers with respect to the Participant, then the Participant may elect to have any portion of the Participant's Account Balance transferred to the defined benefit governmental plan. A transfer under this Section R may be made before the Participant has had a Severance from Employment as defined in Section W below. A transfer may be made under this Section if the transfer is either for the purchase of permissive service credit (as defined in Code § 415(n)(3)(A)) under the receiving defined benefit governmental plan or a repayment to which Code § 415 does not apply by reason of Code § 415(k)(3) or as otherwise allowed by the IRS. S. UNFORESEEABLE EMERGENCY WITHDRAWALS. In the case of an unforeseeable emergency, the Administrator SHALL allow distributions in accordance with Section 5.05 of the Plan. An unforeseeable emergency is a severe financial hardship resulting from a sudden illness, disability or accidental property loss, subject to strict IRS guidelines. T. PARTICIPANT LOANS. The Administrator has directed the Trustee NOT to make Participant loans in accordance with Article IV of the Plan. U. QUALIFIED DOMESTIC RELATIONS ORDERS. The Plan shall accept qualified domestic relations orders as provided in Section 13.02 of the Plan. V. PAYMENT OPTIONS. The forms of payment that will be allowed under the Plan, to the extent consistent with the limitations of Code § 401(a)(9) and proposed or final Treasury regulations thereunder, include a single lump-sum payment; installment payments for a period of years; partial lump-sum payment of a designated amount, with the balance payable in installment payments for a period of years; annuity payments (payable on a monthly, quarterly, or annual basis) for the lifetime of the Participant or for the lifetimes of the Participant and Beneficiary; and such other forms of installment payments as may be approved by the Administrator, which is not inconsistent with the Plan. W. DISTRIBUTIONS. A Participant may request distributions as follows: 1. A Participant may request a distribution at any time upon Severance from Employment. "Severance from Employment" means the complete severance of the employer/employee relationship with any and all employers participating in the Plan, including retirement or death. Thus, a Severance from Employment would not occur if a Participant transfers employment (i) from one local government that participates in the Plan to another local government that participates in the Plan, or (ii) from the State to a local government that participates in the Plan, or (iii) from a local government that participates in the Plan to the State. 11 08-2017 State of Tennessee Deferred Compensation Plan I for Participating Governmental Employers 24 2. A Participant may request a distribution prior to Severance from Employment during the calendar year in which he or she reaches age 70½ or, thereafter, or, if earlier, upon death. A Participant may also request a distribution prior to Severance from Employment upon incurring an approved Unforeseeable Emergency. 3. A Participant may request a distribution from a Rollover Contribution Account at any time. X. ADMINISTRATIVE INFORMATION. The Participating Employer further understands and acknowledges that:  This Participating Employer Agreement has not been approved by the Internal Revenue Service. Obtaining such approval, if desired by the Employer, is solely the responsibility of the Employer.  The Chair of the Tennessee Consolidated Retirement System ("Chair") and the Participating Employers are not responsible for providing tax or legal advice to Participants.  The Participating Employer has consulted, to the extent necessary, with its own legal and tax advisors.  All capitalized terms which are used herein but not defined herein shall have the meanings set forth in the Plan Document.  The Participating Employer will electronically remit in a timely manner, all employee and employer contributions to the Plan in a manner acceptable with the Plan's Third Party Administrator. The Employer's payroll administrator is responsible for reconciliation of all contributions to the Plan and shall provide the Plan Administrator with required contribution reconciliation reports. Each Employer is required to use the Plan Service Center to administer their employee contributions, indicative data, and enrollment information. If the Participating Employer fails to remit the requisite contributions in a timely manner, the Chair reserves the right, at the Chair's sole discretion, to terminate the Employer's participation in the Plan. In such event, the Chair shall notify the Employer of the effective termination date, and the Employer shall immediately notify all its Employees participating in the Plan of the termination and the effective date thereof. Notwithstanding the foregoing, the Employer acknowledges that it is the sole responsibility of the Employer to remit the requisite reports and contributions to the Plan and that neither the State, the Chair, the Trustees, its employees or agents shall have any responsibility or liability for ensuring or otherwise monitoring that this is done.  Participating Employers are required to use the investment options made available under the Plan. From time to time those investment options may be changed. If an investment option is eliminated, the Administrator may automatically reinvest the money in the eliminated investment option into a new investment option. After any appropriate black-out period, the affected Participants may re-direct money in the new investment option to any other available investment option. The Participants shall have no right to require the Administrator to select or retain any investment option. Any change with respect to investment options made by the Plan (on the Plan level) or a Participant (on the individual level), however, shall be subject to the terms and conditions (including any rules or procedural requirements) of the affected investment options. 12 08-2017 State of Tennessee Deferred Compensation Plan I for Participating Governmental Employers 25 This Participating Employer Agreement is duly executed on behalf of the Participating Employer by the undersigned authorized signatories. PARTICIPATING EMPLOYER’S AUTHORIZED SIGNATORIES: By: ______________________________ By: _____________________________________ Title: Title: ___________________________________ Date: _______________________________ Date: ___________________________________ ACCEPTANCE OF PARTICIPATING EMPLOYER'S PARTICIPATION IN THE TENNESSEE STATE DEFERRED COMPENSATION PLAN AND TRUST BY THE TREASURER, STATE OF TENNESSEE, CHAIR OF THE TENNESSEE CONSOLIDATED RETIREMENT SYSTEM. By: David H. Lillard, Jr. Title: Treasurer, State of Tennessee, Chair of the Tennessee Consolidated Retirement System Date: 13 08-2017 State of Tennessee Deferred Compensation Plan I for Participating Governmental Employers 26  SCHEDULE 1 TENNESSEE STATE DEFERRED COMPENSATION PLAN AND TRUST- 457(b) PARTICIPATING EMPLOYER AGREEMENT Participating Employer Name: City of Hendersonville Classes of Eligible Employees Contribution Amount _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ 14 08-2017 State of Tennessee Deferred Compensation Plan I for Participating Governmental Employers 27  LEGISLATIVE HISTORY Resolution 2024-25 Sponsor: Clary Committee: Finance Date of Committee Meeting: May 28th, 2024 Committee Recommendation: 28 DATE: May 28th, 2024 ORDINANCE/RESOLUTION # Resolution 2024 - 25 SPECIFIC REQUEST/ That the Board of Mayor and Alderman consider moving RECOMMENDATION: to the State of Tennessee 457(b) plan for all employees STAFF REPORT REPORT PREPARED BY: Jason Gallo – Administrative Services Director BACKGROUND: 1 VOYA currently provides financial oversight for the 457(b) voluntary retirement plan for employees. City employees can contribute their own money in a ROTH or traditional 457(b). The City makes no contributions to a 457(b) account. The City employees have had difficulty in the past few years setting up new plans, making changes, and submitting plan withdraws. DISCUSSION: 2 The State of Tennessee allows municipalities to join the Empower 457(b) plan. Empower is the sole provider for the 401(k) and 457(b) plans for the State of Tennessee. Empower provides an online portal that allows all employees to submit their contribution amounts for retirement and manage their investment portfolio. TCRS will review fund performance and maintain fiduciary responsibility over all investment options. The City would freeze all employee contributions related to the VOYA 457(b) and switch to the Empower 457(b). Those individuals with money in VOYA may choose to leave the money in the VOYA account but they cannot make any further contributions. All new contributions would be made to the Empower 457(b). There is no cost to the City, as any fees would be associated with the employees who participate in the plan and the funds they elect to invest. Empower 457(b) investment fees are lower than the VOYA investment fees. The VOYA plan currently uses a 0.20% basis charge. The Empower Plan uses 0.149% basis charge. The lower charge would save participants money on the fees charged to their investments. By moving the 457(b) under the State of Tennessee’s plan, Empower will have the ability to see not only the 457(b) and 401(k) values, but can also see the TCRS amounts employees would receive. This gives the Empower Investment Advisors the ability to see an employee’s full retirement picture and provide financial advice based on all facets of information. FISCAL IMPACT: 3 There is no fiscal impact with this change. 29