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Home My WebLink AboutCCpkt2017-06-27 AGENDA City Council Work Session Tuesday, June 27, 2017 @ 6:30 PM A nna City Hall, Council Chambers 111 N. P owell Parkway, A nna, Texas 75409 T he C ity Council of the C ity of A nna will meet in Work S ession at 6:30 P M, on J une 27, 2017, at the A nna C ity Hall, L ocated at 111 North P owell Parkway (Hwy 5), to consider the following items. 1.C all to O rder, R oll Call and E stablishment of Quorum 2.B rief ing/Discussion regarding the F Y 17 and preliminary draft F Y 18 Budgets. (D ana T hornhill) a 3.B rief ing/Discussion regarding property tax exemptions and tax f reeze. (City Manager) a 4.C L O S E D S E S S I O N (E X C E P T I O NS ) Under Tex. Gov't Code Chapter 551, the City Council may enter i nto closed session to discuss any items listed or referenced on this agenda under the fol lowing exceptions: a.Consult with legal counsel regarding pending or contemplated litigation and/or on matters in which the duty of the attorney to the governmental body under the Texas D isciplinary Rules of Professional C onduct of the S tate Bar of Texas clearly conflicts with Chapter 551 of the Government Code (Tex. Gov’t Code §551.071). a b.Discuss or deliberate the purchase, exchange, lease, or value of real property (Tex. Gov’t C ode §551.072); acquisition of right-of-way, easements, and land f or parks and municipal f acilities. a c.Discuss or deliberate E conomic Development Negotiations: (1) To discuss or deliberate regarding commercial or f inancial inf ormation that the C ity has received f rom a business prospect that the C ity seeks to have locate, stay, or expand in or near the territory of the City of Anna and with which the City is conducting economic development negotiations; or (2) To deliberate the offer of a financial or other incentive to a business prospect described by subdivision (1). (Tex. Gov’t C ode §551.087); discuss proposed development in Anna Town C enter. a d.Discuss or deliberate personnel matters (Tex. Gov’t Code §551.074); discuss appointments/reappointments to boards and commissions. a The Council further reserves the right to enter i nto executive session at any time throughout any duly noticed meeting under any applicable exception to the Open Meetings Act. 5.C onsider/Discuss/A ction on any items listed on any agenda—work session, regular meeting, or closed session—that is duly posted by the City of Anna for any City C ouncil meeting occurring on the same date as the meeting noticed in this agenda. 6.A djourn. T his is to certify that I , Carrie L . S mith, City S ecretary, posted this agenda at a place readily accessible to the public at the A nna City Hall and on the C ity Hall bulletin board at or before 5:00 p.m. on 22nd day of J une, 2017.. ___________________________________ Carrie L . Smith, City S ecretary 1. The Council may vote and/or act upon each of the items listed in this agenda. 2. The C ounc il reserves the right to retire into executive session c oncerning any of the items listed on this agenda, whenever it is considered nec essary and legally justified under the Open Meeting Act. 3. Persons with a disability who want to attend this meeting who may need assistanc e should c ontact the City S ec retary at 972 924-3325 two working day s prior to the meeting so that appropriate arrangements c an be made. Item No. 2. C ity C ouncil Agenda S taf f R eport Meeting Date: 6/27/2017 AG E ND A IT E M : B riefing/Discussion regarding the F Y 17 and preliminary draf t F Y 18 B udgets. (Dana Thornhill) S UM M ARY: Staf f will review the f ollowing draf t budgets with the C ity C ouncil: Planning & Development Parks Streets S TAF F RE C O M M E ND AT IO N: T hese are preliminary draft budget proposals. A ny f eedback or comments are welcome. Item No. 3. C ity C ouncil Agenda S taf f R eport Meeting Date: 6/27/2017 AG E ND A IT E M : B riefing/Discussion regarding property tax exemptions and tax freeze. (City Manager) S UM M ARY: Property tax in Texas is a locally assessed and locally administered tax. T here is no state property tax. P roperty tax brings in the most money of all taxes available to local government to pay for schools, roads, police and fire services, emergency response services, parks and other services provided by local government. Texas offers a variety of partial or total (absolute) exemptions from appraised property values used to determine local property taxes. A partial exemption removes a percentage or a fixed dollar amount of a property's value from taxation. A total (absolute) exemption excludes the entire property from taxation. Taxing units are mandated by the state to offer certain (mandatory) exemptions and have the option to decide locally on whether to of f er others (local option). Most property tax exemptions are mandated by the state and are available to any eligible property owner (see attached Texas P roperty Tax E xemptions). Homestead E xemptions Several R esidence Homestead exemptions are available to Texas property owners (see attached Appendix C ). W hile most homestead exemptions are mandatory, a f ew are available by local option only. L ocal option homestead exemptions include the general residence homestead exemption for cities, and the Age 65 or older or disabled homestead exemption. T he C ity of Anna currently of f ers a $30,000 homestead exemption f or Age 65 older property owners. T he City does not offer a disabled person exemption or a general homestead exemption. $30,000 is the median and near the average for Collin County cities that of f er the A ge 65 or older homestead exemption (see attached comparative chart). Exemptions f rom property tax require applications in most circumstances. A pplications for property tax exemptions are f iled with appraisal districts. Appraisal district chief appraisers are responsible f or determining whether property qualif ies f or an exemption. Tax Freeze A 2003 amendment to the Texas Constitution, H.J .R . 16, and an enacting bill, H.B . 136, provide that a city may f reeze the homestead taxes of persons over the age of 65. F or example, if a person over 65 currently pays $800 in city property taxes, that person will never pay more than that dollar amount during the person’s lifetime, or during the lif etime of certain surviving spouses if the freeze is enacted. The f reeze is at the option of the city council, except that an election is required if a petition is received by five percent of the registered voters in the city (see attached Tax F reeze Q&A ) Of the 27 cities in C ollin C ounty, only 11 of f er a tax f reeze f or property owners A ge 65 or older or to the disabled (see attached comparative chart). T he legislation is clear that a tax freeze is permanent once enacted and cannot be repealed. A tax freeze would also be cumulative of the over 65 homestead exemption. Tax Deferr al Unlike persons under 65, property owners 65 and older cannot lose their homesteads f or non- payment of property taxes (Texas Tax Code § 33.06). This is known as a “deferral.” T he tax freeze is also cumulative of the def erral. To obtain a def erral, an individual must file with the chief appraiser for the appraisal district in which the property is located an af f idavit stating the facts required to be established by state law. T he chief appraiser shall notify each taxing unit participating in the district of the f iling. A f ter an af f idavit is f iled, a taxing unit may not f ile suit to collect delinquent taxes on the property and the property may not be sold at a sale to foreclose the tax lien until the 181st day after the date the individual no longer owns and occupies the property as a residence homestead. S TAF F RE C O M M E ND AT IO N: Any changes to the current homestead exemptions or the adoption of a tax f reeze would shift a portion of the total tax burden to other property owners and could affect the city’s tax rate. T he impact of a tax f reeze in particular is diff icult to predict since it exists in perpetuity and cannot be repealed. AT TAC HM E NT S: D escription Upload D ate Type Texas Property Tax Exemptions 6/21/2017 Backup Material Appendix C, R esidence Homestead E xemptions 6/21/2017 Backup Material C omparative C hart (Collin C ounty Cities)6/21/2017 Backup Material Tax Freeze Q&A 6/21/2017 Backup Material Texas Property Tax Exemptions Complete and Partial Property Tax Code Exemptions Available to Property Owners Who Qualify January 2016 Glenn Hegar Texas Comptroller of Public Accounts Tax Code Section 5.05(a) authorizes the Comptroller’s office to prepare and issue publications relating to the appraisal of property and the administration of taxes as a public service. By publishing this manual, the Comptroller’s office is mak- ing available an information resource of a general nature regarding the appraisal of property and the administration of taxes. This publication does not address and is not intended to address all aspects of property appraisal, tax administra- tion or property tax law. The information contained in this publication neither constitutes nor serves as a substitute for legal advice. Pursuant to Tax Code Section 5.041(f), the Comptroller’s office may not advise a property owner, a property owner’s agent or the appraisal district on a protest matter. Questions regarding property appraisal, tax administration, the meaning or interpretation of statutes, legal requirements and other similar matters should, as appropriate or necessary, be directed to an attorney or other appropriate counsel. Texas Property Tax Property Tax Exemptions Table of Contents Property Tax Exemptions 1 Exemption Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Owner’s Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Property’s Qualifications and Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Chief Appraiser Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Types of exemptions 3 Residence Homestead (Tax Code Section 11.13) . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Veterans’ Exemptions (Tax Code Sections 11.131, 11.132, 11.133, 11.22 and 11.23(A)) . . . . . . . .5 Charitable Organizations Generally (Tax Code Section 11.18) . . . . . . . . . . . . . . . . . . . . .6 Community Land Trusts (Tax Code Section 11.1827) . . . . . . . . . . . . . . . . . . . . . . . . . .6 Primarily Charitable Organizations (Tax Code Section 11.184) . . . . . . . . . . . . . . . . . . . . .6 Religious Organizations (Tax Code Section 11.20) . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Private Schools (Tax Code Section 11.21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Public Property (Tax Code Section 11.11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Appendix A – Tax Code Exemption General Application Provisions 9 Appendix B – Other Property Tax Code Exemption Summaries 11 Appendix C – Residence Homestead Exemptions 17 Texas Property Tax Property Tax Exemptions Property tax in Texas is a locally assessed and locally admin- istered tax. There is no state property tax. Property tax brings in the most money of all taxes available to local government. Property taxes pay for schools, roads, police and firemen, emergency response services, libraries, parks, and other ser- vices provided by local government. State law provides for a variety of exemptions from property tax for property and property owners that qualify for the exemption. Texas offers a variety of partial or total (absolute) exemp- tions from property appraised values used to determine local property taxes. A partial exemption removes a percentage or a fixed dollar amount of a property’s value from taxation. A total (absolute) exemption excludes the entire property from taxation. Taxing units are mandated by the state to offer cer- tain (mandatory) exemptions and have the option to decide locally on whether or not to offer others . Exemption Applications The law requires the property owner to apply for an exemp- tion in most circumstances .1 If a property owner fails to file a required application on time, the owner usually forfeits the right to the exemption unless late application provisions exist in law .2 The general deadline for filing an exemption application is before May 1.3 Charitable organizations improving property for low-income housing and community housing develop- ment associations must file the application for exemption within 30 days of acquiring the property.4 Some exemptions require the property owner to file an ap- plication one time and others require the property owner to file an application annually. Most one-time exemptions al- low the chief appraiser to request a new application to verify that a property or property owner remains eligible for the exemption . Appendix A is a chart outlining which Tax Code exemptions: • require no application; • require an annual application; or • require a one-time application, unless requested by the chief appraiser . Appraisal district chief appraisers are responsible for deter- mining whether or not property qualifies for an exemption.5 Property owners may appeal the chief appraiser’s exemp- tion determinations, including the denial of an exemption.6 Taxing units, on the other hand, may appeal the granting of an exemption to a property owner .7 An individual property owner may not, however, challenge the grant of an exemption to another property owner. Only a taxing unit may challenge the exemption of property from the appraisal records .8 Prop- erty is taxable unless the owner shows that it meets all legal requirements for a total exemption.9 Exemption applications ask for most or all of the information needed to decide an exemption issue. Most exemption cases will depend on one or more of the following three issues: (1) the owner’s eligibility; (2) the property’s qualifications; or (3) the property’s use . Property Tax Exemptions — 1 1 Tex. Tax Code § 11.43(a) 2 Tex. Tax Code §§ 11.43(d), 11.431, 11.433, 11.435, 11.438, 11.439 and 11.4391 3 Tex. Tax Code § 11.43(d) 4 Tex. Tax Code § 11.436 5 Tex. Tax Code § 11.45 6 Tex. Tax Code § 41.41 7 Tex. Tax Code § 41.03 8 Tex. Tax Code § 41.03 9 Tex. Tax Code § 11.01(a) 2 — Property Tax Exemptions Owner’s Qualifications Ownership requirements vary by exemption. Exemptions, such as those for individuals or families (homestead or dis- abled veterans’ exemptions), may require evidence of age, physical condition or disability, military service, family rela- tionship or other factors . The date for determining most exemption qualifications is Jan. 1, but there are some exceptions. Certain exemptions are determined immediately upon a change in life of the prop- erty owner or by the chief appraiser on a property’s acquisi- tion date .10 January 1 The date for determining owner qualifications for general homestead exemptions is Jan. 1. Property receiving exemp- tions for freeport, abatement, pollution control, historic or archeological site, solar- and wind-powered energy devices, offshore drilling rigs, water conservation initiatives and dis- abled veterans must qualify on Jan. 1.11 Immediate Homeowners who reach age 65 or who become disabled dur- ing a tax year, will qualify immediately for those exemptions, as if the homeowner qualified on Jan. 1 of the tax year. In ad- dition, a surviving spouse age 55 or older may qualify for the deceased spouse’s exemption, if the spouse dies in the year that he or she reaches age 65. Disabled veterans or their sur- viving spouses with homes donated by charitable organiza- tions and surviving spouses of U.S. armed services members killed in action also qualify immediately for those exemp- tions, as if they qualified on Jan. 1 of the tax year.12 Organizations qualifying for immediate exemption include cemeteries, charitable organizations, religious organizations, private schools, low-income housing organizations, youth development associations, nonprofit water supply and waste- water service corporations, veteran’s organizations and other nonprofit organizations. Acquisition Date When the state, a political subdivision of the state and other qualifying organizations acquire property used for public purposes, the chief appraiser determines the property’s ex- emption qualifications as of the acquisition date.13 Property’s Qualifications and Use Many exemptions apply only to specific classes of property. The property owner must list all property subject to the ex- emption and demonstrate that each property meets exemp- tion requirements. How and when the property owner uses the property is often critical in determining exemption cases. An important factor is whether a property’s use is exclusive, primary or incidental. Chief Appraiser Determinations The chief appraiser is responsible for (1) granting an exemp- tion application; (2) disapproving an exemption application and asking for more information; (3) modifying an exemp- tion application; or (4) denying an exemption application. A property owner is entitled to a written notice of a modifica- tion or the denial of an exemption application and may pro- test such before an appraisal review board (ARB), if a protest to the ARB is timely filed.14 A chief appraiser may deny an application for any number of reasons. Denial of an exemption application can be because, but not limited to, any of the following reasons: • Property owner is not entitled to the exemption; • The property does not qualify for an exemption; • Documentation filed with an exemption application does not support the exemption; • Exemption is not filed timely; • In the case of age 65 or older and disabled, only one ex- emption may be claimed; • Documentation filed with a request for homestead exemp- tion does not match the property address; or • In the case of a residence, an exemption has already been granted on another property. 10 Tex. Tax Code § 11.43(d) 11 Tex. Tax Code § 11.42 12 Tex. Tax Code § 11.42 13 Tex. Tax Code §§ 11.42 and 11.436 14 Tex. Tax Code § 11.45 Property Tax Exemptions — 3 Texas Property Tax Types of Exemptions Tax Code exemption requirements are extensive. Property owners should read applicable statutes carefully. The Comp- troller’s hardcopy publication annotated Property Tax Code contains the text of the law and notes on significant court cases. The following is a short summary of selected exemption pro- visions. Appendix B lists other exemptions authorized by the Tax Code . Residence Homestead (Tax Code Section 11.13) Most residential exemption court cases concern the owner’s qualifications for the exemption; whether the exemption cov- ers specific improvements or amounts of land; or whether the property is the principal residence of the owner . Appendix C lists mandatory and local option residence homestead exemp- tions, their amounts and the applicable taxing units. General Residence Homestead Texas law requires school districts to offer a $25,000 exemp- tion on residence homesteads .15 Any taxing unit, including a city, county, school district or special district, has the option of deciding locally to offer a separate residence homestead exemption of up to 20 percent of a property’s appraised value, but not less than $5,000.16 Counties are also required to of- fer a $3,000 exemption if the county collects farm-to-market roads or flood control taxes.17 There are no specific qualifications for the general homestead exemption other than the owner has an ownership interest in the property and uses the property as the owner’s principal residence .18 However, an applicant is required to state that the applicant does not claim an exemption on another residence homestead in or outside of Texas . The application must in- clude a copy of the applicant’s driver’s license or state iden- tification card. This requirement does not apply to a resident of a facility that provides services related to health, infirmity, or aging; or to applicants who are certified for participation in the Attorney General’s Address Confidentiality Program.19 A chief appraiser is prohibited by law from allowing a home- stead exemption unless the address on the identification pro- vided corresponds to the address of the property for which the exemption is claimed. A chief appraiser may waive this requirement for an active duty U.S. armed services member or the spouse of an active duty service member if the application includes a copy of the military identification card and a copy of a utility bill for the residence homestead. A chief appraiser also may waive the requirement if the applicant holds specific driver’s license issued for judges and the spouses of judges or peace officers and includes with the application a copy of the application for that license provided to the Texas Department of Transportatio n .20 Normally the exemption applies to those portions of the house actually used as a residence, as opposed to business or other use .21 The homestead includes up to 20 acres of land and any improvements used for residential purposes.22 The home must be the principal residence of the applicant. A qualified homeowner does not lose his or her homestead exemption if the homeowner does not establish a different principal residence, intends to return and occupy the resi- dence and is temporarily absent for a period of less than two years. The law provides that homeowners in military service inside or outside the United States or in a facility providing services related to health, infirmity or aging may be away from the home longer than two years and still keep the home - stead exemption . The two-year limit does not apply to these homeowners .23 15 Tex. Tax Code § 11.13(b) 16 Tex. Tax Code § 11.13(n) 17 Tex. Tax Code § 11.13(a) 18 Tex. Tax Code § 11.13(j)(1) 19 Tex. Tax Code § 11.43(j) 20 Tex. Tax Code § 11.43(n) and (p) 21 Tex. Tax Code § 11.13(k) 22 Tex. Tax Code § 11.13(j)(1) 23 Tex. Tax Code § 11.13(l) 4 — Property Tax Exemptions Age 65 or Older or Disabled Texas law requires school districts to offer an additional $10,000 residence homestead exemption to persons age 65 or older or disabled.24 Any taxing unit, including a city, county, school district or special district, has the option of deciding locally to offer a separate residence homestead exemption for persons age 65 or older in an amount not less than $3,000.25 To qualify for the mandatory and local option exemption for persons age 65 or older, the owner must be age 65 or older and live in the house.26 If the age 65 or older homeowner dies, the surviving spouse may continue to receive the local option exemption if the surviving spouse is age 55 or older at the time of death and lives in and owns the home and applies for the exemption .27 A disabled person must meet the definition of disabled for the purpose of payment of disability insurance benefits under the Federal Old-Age, Survivors and Disability Insurance Act.28 A homeowner does not have to meet the definition of disabled or age 65 or older on Jan. 1 of the tax year, but may qualify as disabled or age 65 or older at any time during the tax year. The exemption applies to the entire tax year as if the person was disabled or age 65 on Jan. 1.29 If these applicants are not specifically identified on a deed or other recorded instrument, they must provide an affidavit or other compelling evidence of ownership .30 The trustor of a qualifying trust may qualify for the residence homestead exemption. A residence owned by an individual through an interest in a qualifying beneficial trust and oc- cupied by such individual as a trustor or beneficiary of the trust may qualify. An owner’s surviving spouse who has a life estate in a residence may also qualify the property for a residence homestead exemption .31 The Tax Code places a ceiling on school taxes for residence homesteads owned by persons who are age 65 and older or disabled. The tax ceiling continues for age 55 or older surviv- ing spouses of age 65 or older owners who die while qualified for the tax ceiling. These homeowners may also transfer the percent of tax paid, based on their ceiling, when they pur- chase another home and use it as their principal residence .32 A county, city or junior college district can offer a tax limita- tion on homesteads of taxpayers who are disabled or age 65 or older .33 The taxing unit’s governing body may adopt the limitation or citizens in the taxing unit by petition and elec- tion may adopt the limitation .34 Once adopted, the Tax Code provides for the tax ceiling for disabled and age 65 or older homeowners and their right to transfer to another homestead in that taxing unit the same benefit of that tax ceiling. It also provides for surviving spouses age 55 or older to retain the tax ceiling.35 Manufactured and Cooperative Housing Manufactured homes may qualify for homestead exemptions. For a manufactured home to qualify as a residential home- stead, the owner must follow detailed provisions concerning a statement of ownership and location .36 A property owner may also receive a homestead exemption for cooperative (co-op) housing.37 Upon receiving a request from the co-op, the chief appraiser must separately appraise and list each individual stockholder’s interest. Each stock- holder whose interest is separately appraised may protest and appeal the appraisal like any other property owner.38 Uninhabitable or Unstable If a qualified residential structure for which the owner re- ceives an exemption is rendered uninhabitable or unusable by a casualty or by wind or water damage, the owner may continue to receive the exemption. The exemption for the structure and the land and improvements used in the residen- tial occupancy of the structure while the owner constructs a replacement qualified residential structure on the land con- tinues if the owner does not establish a different principal residence for which the owner receives an exemption during that period and intends to return and occupy the structure as the owner’s principal residence .39 24 Tex. Tax Code § 11.13(c) 25 Tex. Tax Code § 11.13(d) 26 Tex. Tax Code § 11.13(c) and (d) 27 Tex. Tax Code § 11.13(q) 28 Tex. Tax Code § 11.13(m)(1) 29 Tex. Tax Code § 11.42(c) 30 Tex. Tax Code § 11.43(o) 31 Tex. Tax Code § 11.13(j)(1)(D) and (j)(2) 32 Tex. Tax Code § 11.26(a), (g) and (i) 33 Tex. Tax Code § 11.261(a) 34 Tex. Const. art. VIII, § 1-b(h) 35 Tex. Tax Code § 11.261(g) and (i) 36 Tex. Tax Code § 11.432 37 Tex. Tax Code § 11.13(o) 38 Tex. Tax Code § 23.19(b) 39 Tex. Tax Code § 11.135 Property Tax Exemptions — 5 To continue to receive the exemption, the owner must begin active construction of the replacement qualified residential structure or other physical preparation of the site on which the structure is to be located not later than one year after the owner ceases to occupy the former qualified residential struc - ture as the owner’s principal residence . The owner may not receive the exemption for that property under these circum- stances for more than two years . The site of a replacement qualified residential structure is considered under physical preparation if the owner has engaged in architectural or engi- neering work, soil testing, land clearing activities or site im- provement work necessary for the construction of the struc- ture or has conducted an environmental or land use study relating to the construction of the structure.40 Veterans’ Exemptions (Tax Code Sections 11.131, 11.132, 11.133, 11.22 and 11.23(a)) Partial Exemption Texas law provides partial exemptions for any property owned by disabled veterans and surviving spouses and chil- dren of deceased disabled veterans.41 It also provides a par- tial exemption for residence homesteads donated to disabled veterans by charitable organizations that extends to surviving spouses who have not remarried. The amount of exemption is determined according to percentage of service-connected disability.42 Total Exemption A surviving spouse of a member of the U.S. armed services killed in action is allowed a total property tax exemption on his or her residence homestead if the surviving spouse has not remarried since the death of the armed services member.43 A disabled veteran who receives 100 percent disability com- pensation due to a service-connected disability and a rating of 100 percent disabled or individual unemployability from the United States Department of Veterans Affairs is entitled to an exemption from taxation of the total appraised value of the veteran’s residence homestead.44 If these veterans qualify for the exemption after Jan. 1 of a tax year, they receive an exemption for the applicable portion of that year immediately upon qualifying for the exemption. Likewise, if the property no longer qualifies in a year, the exemption is removed for that portion of the year .45 The 100 percent disabled veteran exemption extends to a sur- viving spouse who was married to a disabled veteran who qualified or would have qualified for this exemption if it had been in effect at the time of the veteran’s death. To be entitled to this exemption, the surviving spouse must not have remar- ried; the property was the residence homestead of the surviv- ing spouse when the veteran died; and the property remains the residence homestead of the surviving spouse.46 If the surviving spouse is eligible for the exemption and then qualifies a different property as a residence homestead, the surviving spouse is entitled to the same dollar amount of the former exemption that was last received at the former home- stead. The surviving spouse cannot remarry to receive the subsequent exemption. The chief appraiser of the county in which the former residence was located must provide to the surviving spouse a written certificate so that the amount of the exemption on the subsequent qualified homestead can be determined .47 The chief appraiser is also required, under Tax Code Section 11.431 to accept and approve or deny an application for the surviving spouse after the deadline for filing has passed, if the application for the exemption is filed not later than one year after the delinquency date for the taxes on the homestead.48 Veterans Organizations Property owned by a veterans organization is exempt. Quali- fied veterans’ organizations are defined as non-profit organi- zations composed primarily of members or former members of the armed forces of the United States or its allies and that are chartered or incorporated by the U.S. Congress.49 40 Tex. Tax Code § 11.135 41 Tex. Tax Code § 11.22 42 Tex. Tax Code § 11.132 43 Tex. Tax Code § 11.133 44 Tex. Tax Code § 11.131 45 Tex. Tax Code § 11.131 46 Tex. Tax Code § 11.131 47 Tex. Tax Code §§ 11.42, 26.10(c) and 26.1125 48 Tex. Tax Code § 11.431 49 Tex. Tax Code § 11.23(a) 6 — Property Tax Exemptions Charitable Organizations Generally (Tax Code Section 11.18) Property owned by qualified charitable organizations is ex- empt. An organization must meet requirements regarding how it is organized, what it does and how it uses its property. The organization is limited to charitable activities that are listed in Tax Code Section 11.18.50 Exemptions for charitable organizations require the proper- ty owner to have a charter or bylaws dedicating property to particular purposes and providing for disposition of property upon dissolution .51 The bylaws must pledge the group’s prop- erties to charitable purposes. The organization may not allow anyone to realize private gain from the organization’s activi- ties .52 In some cases, particularly involving medical care fa- cilities, children’s homes and nursing homes, questions may involve whether the institution serves people who cannot pay for services as well as those who can. The exemption applies to property (buildings and land on which the buildings are located and personal property) owned by the charitable organization. The property must be used exclusively by the organization or other equally qualified or- ganizations. If part of the property is leased to or used by a nonqualified person or business, the other use must be limited to activities that benefit the people the organization serves.53 Community Land Trusts (Tax Code Section 11.1827) Real and personal property owned by a community land trust for the purpose of providing affordable housing for low- income and moderate-income residents, promoting resident ownership of housing, keeping housing affordable for future residents, and capturing the value of public investment for long-term community benefit is exempt.54 The exemption must be adopted by the governing body of the taxing unit before July 1.55 Once the exemption is allowed, it does not have to be claimed in subsequent years unless the ownership changes or the person’s qualifications for the exemption changes.56 To receive the exemption, the trust must meet certain require - ments of a charitable organization; own the land for the pur- pose of leasing it and selling or leasing housing units located on the land; and engage exclusively in the sale or lease of housing as provided for in the Local Government Code Sec- tion 373B.002. The trust must also conduct an annual audit by an independent auditor and report the results of the au- dit to the local governing body and the chief appraiser. The property cannot be exempted after the third year on which the trust acquired the property unless the trust is offering to sell or lease the property or is leasing the property according to Local Government Code Chapter 373B.57 Primarily Charitable Organizations (Tax Code Section 11.184) Real and personal property owned by organizations engaged primarily in performing charitable functions is exempt. Be- fore applying for an exemption with the appraisal district, an organization must obtain from the Comptroller’s office a de- termination letter stating the organization is engaged primar- ily in performing charitable functions. The chief appraiser must accept a Comptroller’s office determination letter as conclusive evidence that the organization engages primarily in performing charitable functions and is eligible for exemp- tion. The chief appraiser determines if the organization uses its property for its charitable purposes. An organization is required to obtain a new Comptroller’s office determination letter every fifth year after the exemption is granted. To im- plement the determination process, the Comptroller’s office has adopted rules and prescribed a form for applying for a determination letter .58 The exemption also applies to partially complete improve- ments or for physical preparation . The exemption for incom- plete improvements lasts for three years.59 Religious Organizations (Tax Code Section 11.20) Places of religious worship and clergy residences owned by qualified religious groups are exempt. Religious organiza- tions must be organized and operated primarily for religious worship or the spiritual welfare of individuals. The religious 50 Tex. Tax Code § 11.18 51 Tex. Tax Code § 11.18(f) 52 Tex. Tax Code § 11.8(e) 53 Tex. Tax Code § 11.18 54 Tex. Tax Code § 11.1827 and Tex. Loc. Gov’t Code § 373B.004 55 Tex. Tax Code § 11.1827 56 Tex. Tax Code § 11.43(c) 57 Tex. Tax Code § 11.1827 58 Tex. Tax Code § 11.184 59 Tex. Tax Code § 11.184 Property Tax Exemptions — 7 organization must meet requirements similar to those im- posed on charitable and youth organizations. Generally, if an organization qualifies under this section, it may exempt property of the following types: actual places of religious worship, personal property used at the place of worship, residences for clergy and personal property used at the residences. A religious organization may use its assets in performing its functions or the functions of another religious organization.60 Public property owned by the state or a taxing unit and leased to a religious organization may receive the religious organi- zation exemption if the property is used as a place of regular religious worship and meets other requirements of the Tax Code. The religious organization applies and takes other ac- tion relating to the exemption as if the organization owned the property .61 A property owned by a religious organization and leased for use as a school may be exempt as a school. A religious or- ganization’s land held for expanding or constructing a place of worship may be exempt, so long as the land produces no revenue during the holding period. The land exemption has a limit of six years for contiguous property and three years for non-contiguous property.62 The exemption also applies to partially complete improve- ments or for physical preparation . The exemption for incom- plete improvements lasts for three years.63 Exemptions for religious organizations require the property owner to have a charter or bylaws dedicating property to par- ticular purposes and providing for disposition of property upon dissolution .64 Private Schools (Tax Code Section 11.21) The school exemption applies to property used for school purposes. As with charitable and religious organizations, the school must use its assets in performing its function or the function of another educational organization.65 A property owned by a religious organization and leased for use as a school may be exempt as a school.66 The exemption also applies to partially complete improve- ments or for physical preparation . The exemption for incom- plete improvements lasts for three years.67 Exemptions for private schools also require the property owner to have a charter or bylaws dedicating property to particular purposes and providing for disposition of property upon dissolution .68 Public Property (Tax Code Section 11.11) To qualify for the public property exemption, the state of Texas or a political subdivision of the state must own the property. The property must be used for public purposes such as the health, comfort and welfare of the public. State- owned property is taxable if it is rented to a private busi- ness that uses it for something inconsistent with the agency’s duties. The property may not be used to provide housing to the public other than students or agency employees. However, if an educational institution uses the property primarily for instructional purposes and secondarily for residences, the property is exempt. Additionally, property held for the benefit of a state junior college, college or university is exempt under the same conditions .69 Property of a higher education development foundation or an alumni association located on land owned by the state for the support, maintenance or benefit of a state institution of higher education is exempt provided that the foundation or organization meets the requirement. The organization must be organized exclusively to operate programs or perform activities for the benefit of institutions of higher education. Finally, the property must be used exclusively for those pro- grams or activities.70 An improvement is considered owned by the state and prop- erty used for public purposes if it is located on land owned by the Texas Department of Criminal Justice, leased and used by the department and subject to a lease-purchase agreement 60 Tex. Tax Code § 11.20 61 Tex. Tax Code § 11.20 62 Tex. Tax Code § 11.20 63 Tex. Tax Code § 11.20 64 Tex. Tax Code § 11.20(c) 65 Tex. Tax Code § 11.21 66 Tex. Tax Code § 11.21 67 Tex. Tax Code § 11.21 68 Tex. Tax Code § 11.21 69 Tex. Tax Code § 11.11 70 Tex. Tax Code § 11.11 8 — Property Tax Exemptions providing that legal title to the improvement will pass to the department at the end of the lease term .71 Tangible personal property leased to the state or a political subdivision is exempt if the property is subject to a lease- purchase agreement providing that the state or political sub- division takes legal title to the property at the end of the lease term. The exemption ends 30 days after the lease terminates if the state or political subdivision does not take title to the personal property .72 Real and personal property owned by a nonprofit corporation engaged primarily in providing chilled water and steam to certain health-related facilities is exempt . The corporation’s property would be considered as if it were owned by the state and used for health and education purposes . Certain facilities related to transportation leased to a private entity to provide transportation or for utility purposes are also exempt .73 71 Tex. Tax Code § 11.11 72 Tex. Tax Code § 11.11 73 Tex. Tax Code § 11.11 Property Tax Exemptions — 9 Appendix A Tax Code Exemption General Application Provisions No Application Required Tax Code Section Exemption 11.11 Public Property 11.12 Federal Exemptions 11.14 Tangible Personal Property Not Producing Income 11.145 Income-Producing Tangible Personal Property Having Value Less Than $500 11.146 Mineral Interest Having Value of Less than $500 11.15 Family Supplies 11.16 Farm Products 11.161 Implements of Husbandry 11.25 Marine Cargo Containers Used Exclusively in International Commerce Annual Application Required Tax Code Section Exemption 11.111 Public Property Used to Provide Transitional Housing for Indigent Persons 11.1801 Charity Care and Community Benefits Requirements for Charitable Hospital 11.181 Charitable Organizations Improving Property for Low-Income Housing 11.1825 Organizations Constructing for Rehabilitating Low-Income Housing: Property Not Previously Exempt (Note: See provisions of 11.1826) 11.184 Organizations Engaged Primarily in Performing Charitable Functions (Note: Reapplication required every fifth tax year instead of annually.) 11.185 Colonia Model Subdivision Program 11.23(b)-(g), (i), (k) or (l)Miscellaneous Exemptions: Federation of Women’s Clubs; Nature Conservancy of Texas; Congress of Parents and Teachers; Private Enterprise Demonstration Associations; Bison, Buffalo and Cattalo; Theater Schools; Community Service Clubs; Scientific Research Corporations; and Incomplete Improvements 11.24 Historic Sites 11.251 Tangible Personal Property Exempt 11.252 Motor Vehicles Leased for Personal Use 11.253 Tangible Personal Property in Transit 11.28 Property Exempted from City Taxation by Agreement 11.311 Landfill-Generated Gas Conversion Facilities 11.32 Certain Water Conservation Initiatives 10 — Property Tax Exemptions One-Time Application Required, Unless Requested by Chief Appraiser Tax Code Section Exemption 11.13 Residence Homestead 11.131 Residence Homestead of 100 Percent or Totally Disabled Veteran 11.132 Donated Residence Homestead of Partially Disabled Veteran 11.133 Residence Homestead of Surviving Spouse of Member of Armed Forces Killed in Action 11.17 Cemeteries 11.18 Charitable Organizations 11.182 Community Housing Development Organizations Improving Property for Low-Income and Moderate-Income Housing: Property Previously Exempt (Note: See provisions of 11.182(e)(3), 11.182(g) and 11.1826) 11.1827 Community Land Trust 11.183 Association Providing Assistance to Ambulatory Health Care Centers 11.19 Youth Spiritual, Mental and Physical Development Associations 11.20 Religious Organizations 11.21 Schools 11.22 Disabled Veterans 11.23(a), (h), (j), (j-1) or (m)Miscellaneous Exemptions: Veterans Organizations; County Fair Associations; Medical Center Development; Medical Center Development in Populous Counties; and National Hispanic Institute 11.231 Nonprofit community Business Organization Providing Economic Development Services to Local Community 11.254 Motor Vehicle Used for Production of Income and for Personal Activities 11.27 Solar and Wind-Powered Energy Devices 11.271 Offshore Drilling Equipment Not in Use 11.30 Nonprofit Water Supply or Wastewater Service Corporation 11.31 Pollution Control Property 11.315 Energy Storage System in Nonattainment Area 11.33 Raw Cocoa and Green Coffee Held in Harris County 11.437 Exemption for Cotton Stored in Warehouse Property Tax Exemptions — 11 Appendix B Other Property Tax Code Exemption Summaries Type Tax Code Section Summary Public property used to provide transitional housing for the indigent 11.111 This section exempts property owned by the United States or a federal agency and used to provide transitional housing to the poor under a program operated by the U.S. Department of Housing and Urban Development. The property is exempted only by ordinance or order of the taxing units in which the property is located. Federal exemptions 11.12 Property exempt from ad valorem taxation under federal law is exempt from taxation. Tangible personal property not used to produce income 11.14 Generally, all tangible personal property, other than manufactured homes, that is not held or used for production of income is exempt from property taxes. However, the governing body of a taxing unit may, by official action, continue to tax property other than family supplies, household goods or personal effects. A structure that is substantially affixed to real estate and is used or occupied as a residential dwelling is taxable. The term structure does not include trailer-type vehicles designed primarily for use as temporary living quarters in connection with recreational, camping, travel or seasonal use. Income-producing tangible personal property and mineral interest property having value of less than $500 11.145 and 11.146 An owner’s personal property used to produce income is aggregated to determine if the owner’s total taxable value in each separate taxing unit is less than $500 and is exempt. The taxable value of a property owner’s mineral interests is aggregated to determine if the taxable value within each taxing unit is less than $500 and is exempt. Family supplies 11.15 A family is entitled to an exemption from taxation of its family supplies for home or farm use. Farm products 11.16 Livestock, poultry, agricultural products, eggs and some nursery products are exempt when they are still in the hands of the person who raised them. Nursery products are exempt only if they are still growing on Jan. 1. Livestock, poultry and eggs must be owned by the person who is paying for their care on Jan. 1. Farm products include standing timber or timber that has been harvested and on Jan. 1 is located on the real property on which it was produced and is under the ownership of the person who owned the timber when it was standing. Implements of husbandry 11.161 Machinery and equipment used for farming, ranching and timber production, regardless of primary design, is exempt. Cemeteries 11.17 Cemetery property is exempt. The property must be used exclusively for human burial. The property may not be held for profit. 12 — Property Tax Exemptions Type Tax Code Section Summary Charity care and community benefits requirements for charitable hospital 11.1801 To qualify as a charitable organization under Tax Code Section 11.18(d) (1), a nonprofit hospital or hospital system must provide charity care and community benefits as follows: (1) at a level that is reasonable in relation to the community needs, as determined through the community needs assessment, the available resources of the hospital or hospital system, and the tax-exempt benefits received by the hospital or hospital system; (2) in an amount equal to at least 4 percent of the hospital’s or hospital system’s net patient revenue; (3) in an amount equal to at least 100 percent of the hospital’s or hospital system’s tax-exempt benefits, excluding federal income tax; or (4) in a combined amount equal to at least 5 percent of the hospital’s or hospital system’s net patient revenue, provided that charity care and government-sponsored indigent health care are provided in an amount equal to at least 4 percent of net patient revenue. Charitable organization improving property for low- income housing 11.181 A charitable organization improving property for low-income housing is exempt if it meets the Tax Code requirements and uses volunteer labor to build or repair housing for sale, without profit, to a low-income individual or family. Each property may be exempt for a maximum of five years after the property’s acquisition date. Property that received an exemption based on its ownership by an organization that constructs or rehabilitates property and uses the property to provide affordable, low-income housing and that was subsequently transferred by that organization to a charitable organization is not exempted after the fifth year it was transferred. If the organization sells the property to an individual or family that is not low income, the chief appraiser enters a penalty in the appraisal records and notifies the organization and the buyer. The penalty is equal to the taxes that would have been imposed in each year the property was exempt plus 12 percent interest. Community housing development organizations (CHDOs) improving property for low-income and moderate-income housing (property previously exempt) 11.182 Improved or unimproved real property owned by an organization under Tax Code Section 11.182 is exempt if certain requirements are met. The statute applies to CHDOs (as provided under 42 U.S.C. §12704) meeting requirements of charitable organizations under Tax Code Section 11.18(e) and (f) and engaging exclusively in building or repairing property for sale or rent without profit to low-income or moderate-income individuals or families and related activities. An organization may qualify for an exemption only if it received an exemption under Tax Code Section 11.182 for the subject property for any part of the 2003 tax year. The statute includes restrictions on eligibility and requirements pertaining to, under specified conditions, the number of years property may be exempted, exemption in subsequent years for multifamily rental property of 36 or more dwelling units, certain property constructed after Dec. 31, 2001, property used for administrative purposes, property acquired or sold during the preceding year, and change in ownership. The statute includes requirements for preparation and delivery of annual audits. Property Tax Exemptions — 13 Type Tax Code Section Summary Organizations constructing or rehabilitating low-income housing property not previously exempt 11.1825 Real property owned by an organization under Tax Code Section 11.1825 is exempt if certain requirements are met. Generally, the statute applies to organizations constructing or rehabilitating and using to provide housing to individuals or families meeting certain income eligibility requirements and exemption is prohibited for housing projects constructed by an organization if construction was completed before Jan. 1, 2004. The statute provides for an exemption of 100 percent of appraised value of single-family dwellings subject to sale and, for multi-family or single-family dwellings subject to rental, an exemption of 50 percent of appraised value unless otherwise provided by a the governing body of a taxing unit any part of which is located in a county with a population of at least 1.8 million. An organization may not receive an exemption from a taxing unit located in a county with a population of at least 1.8 million unless the exemption is approved by the taxing unit’s governing body. Under such circumstances, the statute sets forth a process by which an organization must submit a written request for exemption approval to a taxing unit’s governing body and the governing body must take specified action on the request and, if the taxing unit approves the exemption, the chief appraiser must still make a determination that the property qualifies for an exemption. The statute includes restrictions on eligibility and requirements pertaining to, under specified conditions, status, history, policies, and board composition of the organization, income eligibility, housing project square footage reservation for certain individuals or families, rent, property owned for purposes of rehabilitation, transfer of property and change of ownership, appraisal requirements, and public notice of capitalization rates. Tax Code Section 11.1826 includes requirements for preparation and delivery of annual audits. Charitable associations providing assistance to ambulatory health care centers 11.183 An organization that assists ambulatory health care centers is exempt if it is exempt from federal income tax; is funded by a grant under the Federal Public Health Service §330; does not perform abortions or provide abortion services; and meets other Tax Code requirements. Colonia Model Subdivision Program 11.185 Unimproved real property owned by an organization under the colonia model subdivision program is entitled to an exemption if the organization meets the requirements of Tax Code Section 11.18(e) and (f); purchased the property or is developing the property with proceeds of a loan from Texas Department of Housing and Community Affairs; and owns the property for the purpose of developing a model colonia subdivision. Buildings and tangible personal property used for administration can also qualify for an exemption. Penalty with 12 percent annual interest may be assessed under certain circumstances if the property is sold. Youth spiritual, mental and physical development associations 11.19 The property of qualified youth development groups affiliated with a state or national organization is exempt. A youth development association may use its property in performing its functions or the functions of another youth development organization.The exemption also applies to partially complete improvements or physical preparation. The exemption for incomplete improvements lasts only three years. Miscellaneous exemptions 11.23 The miscellaneous exemptions apply to specific entities, such as veteran’s organizations, theater schools and medical center development, as well other exemptions. See the Tax Code for more information. 14 — Property Tax Exemptions Type Tax Code Section Summary Nonprofit community business organization providing economic development services to local community 11.231 An association that qualifies as a nonprofit community business organization is entitled to an exemption from taxation of buildings and tangible personal property it owns and uses exclusively to perform its primary functions. The exemption also applies to real property owned by the organization consisting of an incomplete improvement that is under active construction or other physical preparation and is designed and intended to be used exclusively by qualified nonprofit community business organizations. It also applies to the land on which the incomplete improvement is located that will be reasonably necessary for the use of the improvement. Use of exempt property by non-qualified nonprofit community business organizations does not result in the loss of an exemption if the use is incidental to use by qualified nonprofit community business organizations and limited to activities that benefit the beneficiaries of the nonprofit community business organizations that own or use the property. Historic or archeological sites 11.24 To qualify for the historic or archeological site exemption, a structure must be designated a historic building or archeological site and the taxing unit must vote to grant an exemption. The structure must be designated as a Recorded Texas Historic Landmark by the Texas Historical Commission or the taxing unit must designate it as historically significant and in need of tax relief. The taxing unit decides the amount of the exemption. Marine cargo containers used exclusively in international commerce 11.25 Marine cargo containers used exclusively in international commerce are exempt. A marine cargo container is a container used to transport goods by ship, readily handled without reloading to transfer from one mode of transport to another and used repeatedly. The definition also includes a container that is fully or partially enclosed, has an open top suitable for loading or consists of a flat rack suitable for securing goods onto the container. The exemption is limited to property owned by a citizen or entity of a foreign country and taxed in a foreign country. Goods exported from Texas 11.251 The Tax Code provides for a freeport exemption to implement Art. VIII, Sec. 1-j of the Texas Constitution which exempts goods, wares, ores, merchandise and other tangible property, other than oil, gas and petroleum products (defined as liquid and gaseous materials immediately derived from refining petroleum or natural gas) and aircraft or repair parts used by a certified air carrier. The freeport goods qualify if they leave Texas within 175 days of the date they are brought into or acquired in the state. Freeport goods that are aircraft parts may qualify if they leave the state within 730 days of being acquired or brought into the state, but this extension requires official action by the taxing unit. Leased vehicles for personal use 11.252 Motor vehicles (passenger cars or trucks with a shipping weight of not more than 9,000 pounds) leased for personal use are exempt. Personal use means 50 percent or more of its use, based on mileage, is for activities that do not involve the production of income. By rule, the Comptroller’s office has established exemption application requirements and procedures to determine whether a vehicle qualifies. The lessee completes a Comptroller- adopted form certifying under oath that the vehicle is not primarily used for the production of income. The owner (lessor) maintains the lessee executed forms for inspection and copying by the appraisal district. The owner renders nonexempt vehicles for taxation and provides the chief appraiser with an additional list of all leased vehicles. A city, by ordinance adopted before Jan. 1, 2002, may tax personal-use leased vehicles. Property Tax Exemptions — 15 Type Tax Code Section Summary Tangible personal property in transit 11.253 The Tax Code provides for an exemption for goods-in-transit to implement Art. VIII, Sec. 1-n of the Texas Constitution. Goods in transit are goods acquired inside or outside the state, stored under a bailment contract by a public warehouse operator at one or more public warehouse facilities that are not in any way owned or controlled by the owner of the property who acquired or imported the property and then shipped to another location in or out of this state within 175 days. The goods do not include oil, gas or petroleum products or special inventories such as motor vehicles in a dealer’s retail inventory. To tax goods in transit, taxing units must take official action. Motor vehicle used for production of income and for personal activities 11.254 One passenger car or light truck, if it is owned by an individual and used in the individual’s business or profession and also used for personal activities, is exempt. The exemption does not apply to vehicles used to transport passengers for hire. Solar- and wind-powered energy devices 11.27 Persons who install a solar- or wind-powered energy device to produce energy for onsite use are entitled to exempt the amount of value the device contributes to their property. Offshore drilling rigs 11.271 Offshore drilling rigs that are stored in a county bordering the Gulf of Mexico or a bay or other body of water immediately adjacent to the Gulf of Mexico are exempt. Drilling rigs are exempt only if they are stored for a purpose other than repair and are not used for drilling. They must be designed for offshore drilling. Personal property that is used or part of an offshore spill response system is exempt if the system is being stored while not in use in a county bordering the Gulf of Mexico or a bay or other body of water immediately adjacent to the Gulf of Mexico. Certain ownership requirements apply. Personal property used in connection with the exploration or production of oil or gas is not exempt as an offshore spill response containment system. Tax abatement 11.28 Property owners who have entered redevelopment and tax abatement agreements with local taxing units under Tax Code Chapter 312 are allowed to exempt all or part of the property’s value from taxation. Nonprofit water supply or wastewater service corporations 11.30 Property owned and reasonably necessary for a nonprofit water supply or wastewater service corporation’s functions is exempt. The exemption also applies to partially complete improvements or for physical preparation. The exemption for incomplete improvements lasts for three years. Pollution control 11.31 Property acquired after Jan. 1, 1994 and used for pollution control may receive an exemption. The exemption applies to all or part of real and personal property used solely or partly as a facility, device or method to control air, water or land pollution. The exemption also applies to an extensive list of clean energy technologies that are used to control pollution. The Texas Commission on Environmental Quality (TCEQ) is required to adopt rules to create a list of facilities, devices or methods to control pollution that are eligible for exemption. Property not eligible for the exemption includes residential; park or scenic land; vehicles; property subject to a tax abatement agreement before Jan. 1, 1994; and property owned by a person or company that manufactures pollution control equipment or provides pollution control services. To qualify for a use determination, the person or company must apply to TCEQ for a permit or permit exemption. TCEQ notifies the chief appraiser about the application and determines the proportion of the property that is used for pollution control. Then, TCEQ issues a determination letter to the applicant. The property owner sends the letter with the exemption application to the appraisal district. The chief appraiser must accept the letter’s determination as conclusive evidence for the exemption. 16 — Property Tax Exemptions Type Tax Code Section Summary Landfill-generated gas conversion facilities 11.311 A person is entitled to an exemption on personal property that is located on or in close proximity to a landfill and is used to collect gas generated by the landfill; compress and transport the gas; process the gas; and deliver the gas. This property is considered used as a facility, device or method for the control of air, water or land pollution. Energy storage system in nonattainment area 11.315 Energy storage systems used, constructed, acquired or installed to meet or exceed air pollution laws, rules and regulations is exempt if the governing body of the taxing unit provides for the exemption by official action. It must be in an area designated as non-attainment; be in a municipality with a population of at least 100,000 adjacent to a municipality with a population of more than two million; have 10 megawatt capacity; and be installed on or after Jan. 1, 2014. Certain water conservation initiatives 11.32 Property designated by a taxing unit as property upon which approved local initiatives have been implemented may be exempt. The taxing unit may exempt part or all of the value of property with approved water conservation, desalination or brush control initiatives. The taxing unit’s governing body must designate approved initiatives by adopting an ordinance or other law. Raw cocoa and green coffee held in Harris County 11.33 This section exempts all raw cocoa and green coffee held in Harris County. The owner need not claim the exemption, once granted, in subsequent years unless requested by the chief appraiser. Cotton Stored in Warehouse 11.437 A person who operates a warehouse used primarily for the storage of cotton for transportation outside of Texas may apply for an exemption under Tax Code Section 11.251 for the cotton stored in the warehouse on behalf of all the owners of the cotton. The cotton must be eligible for exemption under Tax Code Section 11.251 and is presumed to have been transported outside of Texas not later than 175 days after the date the cotton was acquired or imported into Texas. Property Tax Exemptions — 17 Appendix C Residence Homestead Exemptions Exemption Tax Code Section Taxing Unit Total or Partial Mandatory or Local Option Amount General Residence Homestead 11.13(b)School Districts Partial Mandatory $25,000 General Residence Homestead 11.13(n) Cities, Counties, School Districts or Special Districts Partial Local Option An amount up to 20 percent of the property’s value, but not less than $5,000 Farm-to-Market Roads or Flood Control (if collected)11.13(a)Counties Partial Mandatory (if collected)$3,000 Age 65 or Older or Disabled 11.13(c)School Districts Partial Mandatory $10,000 Age 65 or Older or Disabled 11.13(d) Cities, Counties, School Districts or Special Districts Partial Local Option An amount adopted by the taxing unit, but no less than $3,000 Disabled Veterans 11.22 Cities, Counties, School Districts and Special Districts Partial Mandatory An amount determined by the percentage of service-connected disability Disabled Veterans with Homes Donated by Charitable Organizations 11.132 Cities, Counties, School Districts and Special Districts Partial Mandatory An amount determined by the percentage of service-connected disability 100 Percent Disabled Veterans 11.131 Cities, Counties, School Districts and Special Districts Total Mandatory 100 percent of the property’s value Surviving Spouse of U.S. Armed Services Member Killed in Action 11.133 Cities, Counties, School Districts and Special Districts Total Mandatory 100 percent of the property’s value Texas Property Tax For more information and additional copies, visit our website: comptroller.texas.gov/taxinfo/proptax The Texas Comptroller of Public Accounts is an equal opportunity employer and does not discriminate on the basis of race, color, religion, sex, national origin, age, or disability in employment or in the provision of any services, programs or activities. In compliance with the Americans with Disabilities Act, this document may be requested in alternative formats by calling toll free 1-800-252-5555 or by calling in Austin 512-463-4600. Sign up to receive email updates on the Comptroller topics of your choice at comptroller.texas.gov/subscribe. Texas Comptroller of Public Accounts Publication #96-1740 January 2016 18 — Property Tax Exemptions Property Tax Exemptions — 17 Appendix C Residence Homestead Exemptions Exemption Tax Code Section Taxing Unit Total or Partial Mandatory or Local Option Amount General Residence Homestead 11.13(b) School Districts Partial Mandatory $25,000 General Residence Homestead 11.13(n) Cities, Counties, School Districts or Special Districts Partial Local Option An amount up to 20 percent of the property’s value, but not less than $5,000 Farm-to-Market Roads or Flood Control (if collected) 11.13(a) Counties Partial Mandatory (if collected) $3,000 Age 65 or Older or Disabled 11.13(c) School Districts Partial Mandatory $10,000 Age 65 or Older or Disabled 11.13(d) Cities, Counties, School Districts or Special Districts Partial Local Option An amount adopted by the taxing unit, but no less than $3,000 Disabled Veterans 11.22 Cities, Counties, School Districts and Special Districts Partial Mandatory An amount determined by the percentage of service-connected disability Disabled Veterans with Homes Donated by Charitable Organizations 11.132 Cities, Counties, School Districts and Special Districts Partial Mandatory An amount determined by the percentage of service-connected disability 100 Percent Disabled Veterans 11.131 Cities, Counties, School Districts and Special Districts Total Mandatory 100 percent of the property’s value Surviving Spouse of U.S. Armed Services Member Killed in Action 11.133 Cities, Counties, School Districts and Special Districts Total Mandatory 100 percent of the property’s value CITY General Homestead Over 65 Homestead Over 65 Tax Freeze Disabled Person Disabled Tax Freeze Allen - 50,000 No 25,000 No Anna - 30,000 No - No Blue Ridge - 10,000 No 10,000 No Carrollton 20% ($5,000 min) - No - No Celina - 30,000 No 30,000 No Dallas 20% ($5,000 min) 64,000 No 64,000 No Fairview - 60,000 No 60,000 No Farmersville - 10,000 No 20,000 No Frisco - 80,000 No 80,000 No Garland 8% ($5,000 min) 51,000 No 51,000 No Josephine - 10,000 Yes 10,000 Yes Lavon 1% ($10,000 min) 20,000 Yes 20,000 Yes Lowry Crossing - 15,000 Yes 15,000 Yes Lucas 8% ($5,000 min) 50,000 Yes 50,000 Yes McKinney - 50,000 No 50,000 No Melissa - 10,000 No 10,000 No Murphy - 50,000 No 50,000 No Nevada - 10,000 No - No New Hope - 50,000 No 50,000 No Parker - 50,000 No - No Plano 20% ($5,000 min) 40,000 Yes 40,000 Yes Princenton - 25,000 Yes 25,000 Yes Prosper 7.5% ($5,000 min) 10,000 Yes 3,000 Yes Royse City - 6,000 Yes 5,000 No Sachse - 50,000 Yes 50,000 Yes Weston - 20,000 Yes 20,000 Yes Wylie - 30,000 Yes 30,000 Yes COLLIN COUNTY CITY TAX EXEMPTIONS FOR TAX YEAR 2017 March 2004 Legal Q&A Bennett Sandlin Legal Services Director Q: What is a property tax freeze? A: Tax freezes are a relatively new concept for cities. A 2003 amendment to the Texas Constitution, H.J.R. 16, and an enacting bill, H.B. 136, provide that a city may freeze the homestead taxes of persons over the age of 65, similar to the current mandatory freeze on school district taxes. For example, if a person over 65 currently pays $800 in city property taxes, that person will never pay more than that dollar amount during the person’s lifetime, or during the lifetime of certain surviving spouses if the freeze is enacted. The freeze is at the option of the city council, except that an election is required if a petition is received by five percent of the registered voters in the city. TEX. CONST. art. VIII, § 1-b(h). Q: If we pass a tax freeze, when does it go into effect? A: The calendar year during which the tax freeze is adopted by the city essentially becomes the “baseline” year beyond taxes on the elderly or disabled cannot increase. For example, a city that passes the tax freeze anytime during calendar year 2004 would use the 2004 tax levy as the baseline amount for the freeze. Beginning in tax year 2005, therefore, the elderly and disabled would have their city tax bills frozen at the 2004 level regardless of rate or valuation increases. Put another way, the benefit of the tax freeze does not accrue until the tax year after the calendar year in which the freeze is enacted. TEX. TAX CODE ANN. § 11.261(b) (Vernon Supp. 2004). Q: Is there a deadline to pass a city tax freeze? A: No. A tax freeze enacted anytime in tax year 2004 is fully effective to freeze tax bills at the 2004 level. TML has been informed of some appraisal districts that are requesting that anticipated tax freeze ordinances be adopted and communicated to the district prior to a certain date in 2004, in June for example. These requests are likely based on a misunderstanding of the tax freeze legislation, which contains no such deadlines. Q: If our city passes a tax freeze, can it change its mind later? A: No. The legislation is clear that the tax freeze is permanent once enacted. TEX. CONST. art. VIII, § 1-b(h). Q: How does the tax freeze interact with the optional senior tax exemption? A: The tax freeze appears to be cumulative of the optional exemption. Example: A city currently grants an optional homestead exemption of $100,000. An elderly resident owning a homestead valued at $125,000 would therefore currently pay city property taxes on only $25,000 of value. If the city then adopted a tax freeze, the amount of taxes paid on the homestead would be “frozen” at the amount paid on the $25,000 of remaining taxable value. Even if the city later cancelled or reduced the $100,000 optional exemption, the taxes would still be frozen at the amount paid on the $25,000. Q: How does the tax freeze interact with the ten percent cap on valuation increases? A; The freeze is cumulative of the ten percent cap. The ten percent cap is a limit on the taxable value of the homestead, while the freeze applies to total taxes paid. Q: How does the tax freeze interact with the senior deferral? A: Unlike persons under 65, the elderly cannot lose their homesteads for non-payment of property taxes. TEX. TAX CODE ANN. § 33.06 (Vernon Supp. 2004). This is known as a “deferral.” The tax freeze is also cumulative of the deferral. As a result, the estates of non-tax paying seniors “enjoying” the freeze will owe less money than they would otherwise. Q: With the combination of the optional elderly exemption, the ten percent valuation cap, the elderly freeze, and the elderly deferral, isn’t it possible that some seniors will be effectively paying little or no property taxes? A: Yes. Q: What about persons who aren’t yet 65 when the tax freeze is enacted? A: The baseline year for the freeze would be the first tax year in which a person qualifies for an over-65 homestead exemption under state law. Q: How is the tax freeze treated under Truth-in-Taxation laws? A: Taxable value written-off due to a tax freeze will be considered lost value for truth-in- taxation purposes, meaning the city will get credit for the lost value in their effective and rollback rate calculations. Id. at 26.012(6)(B). The comptroller’s office is in the process of revising its effective and rollback rate calculation tables to reflect the new freeze, which should be available in the comptroller’s 2005 tax publications. Q: What happens if a senior enjoying a tax freeze moves to a more expensive home in the same city? A: The freeze essentially transfers to the new home, but the taxes owed would increase based on the ratio between the relative values of the old and new homesteads. Id. at 11.261(g). Q: What happens if a person enjoying a tax freeze moves to a home in a different city? A: Unlike the school district tax freeze, a city tax freeze is not transferable from city to city. AGENDA Regular City Council Meeting Tuesday, June 27, 2017 @ 7:30 PM A nna City Hall, Council Chambers 111 N. P owell Parkway, A nna, Texas 75409 T he City Council of the C ity of Anna will meet in Regular S ession at 7:30 P M, on J une 27, 2017, at the Anna C ity Hall, L ocated at 111 North P owell Parkway (Hwy 5), to consider the following items. Welcome to the City Council Meeting. Please sign the Sign-In-Sheet as a record of attendance. If you wish to speak on an open-session agenda item, please fill out the Opinion/Speaker Registration Form and turn it in to the City Secretary before the meeting starts. 1.C all to O rder, R oll Call and E stablishment of Quorum. 2.I nvocation and Pledge of Allegiance. 3.C itizen Comments. Citizens are allowed three mi nutes to speak. The Council is unable to respond to or discuss any issues that are brought up during this section that are not on the agenda, other than to make statements of specific factual information in response to a citizen's inquiry or to recite existing policy in response to the inqui ry. 4.R eceive reports f rom S taff or the City Council about items of community interest. Items of community interest include: expressions of thanks, congratulations, or condol ence; information regarding holi day schedules; an honorary or salutary recogni ti on of a public offi cial, public empl oyee, or other citizen (but not incl uding a change in status of a person's publ ic office or publ ic employment); a remi nder about an upcoming event organized or sponsored by the governing body; information regarding a social, ceremonial, or community event organized or sponsored by an entity other than the governing body that was attended or is schedul ed to be attended by a member of the governi ng body or an official or employee of the muni cipality; and announcements i nvolving an imminent threat to the public health and safety of people in the munici pality that has arisen after the posting of the agenda. 5.C onsent I tems. These items consi st of non-controversial or "housekeeping" items required by law. Items may be considered indivi dual ly by any Council member making such request prior to a motion and vote on the Consent Items. a.A pprove City Council Meeting Minutes: May 16, 2017 May 30, 2017 J une 13, 2017 a b.Review minutes from the May 4, 2017 E D C meeting. (J essica P erkins) a c.Review minutes from the May 4, 2017 C D C meeting. (J essica Perkins) a 6.C onsider/Discuss/A ction regarding a Resolution approving an Agreement with Municipal Voice. (J essica Perkins) a 7.C onsider/Discuss/A ction regarding a R esolution relating to a 457 D eferred C ompensation P lan. (City Manager) a 8.B rief ing/Discussion regarding the 2016 Consumer Conf idence Report. (J oseph J ohnson) a 9.B rief ing/Discussion regarding City Charter review and amendment process. (City A ttorney) a 10.C L O S E D S E S S I O N (E X E C E P T I O NS ) Under Tex. Gov't Code Chapter 551, the City Council may enter i nto closed session to discuss any items listed or referenced on this agenda under the fol lowing exceptions: a.Consult with legal counsel regarding pending or contemplated litigation and/or on matters in which the duty of the attorney to the governmental body under the Texas D isciplinary Rules of Professional C onduct of the S tate Bar of Texas clearly conflicts with Chapter 551 of the Government Code (Tex. Gov’t Code §551.071). a b.Discuss or deliberate the purchase, exchange, lease, or value of real property (Tex. Gov’t C ode §551.072); acquisition of right-of-way, easements, and land f or parks and municipal f acilities. a c.Discuss or deliberate E conomic Development Negotiations: (1) To discuss or deliberate regarding commercial or f inancial inf ormation that the C ity has received f rom a business prospect that the C ity seeks to have locate, stay, or expand in or near the territory of the City of Anna and with which the City is conducting economic development negotiations; or (2) To deliberate the offer of a financial or other incentive to a business prospect described by subdivision (1). (Tex. Gov’t C ode §551.087); discuss proposed development in Anna Town C enter. a d.Discuss or deliberate personnel matters (Tex. Gov’t Code §551.074); discuss appointments/reappointments to boards and commissions. a The Council further reserves the right to enter into executive session at any time throughout any duly noticed meeting under any applicable exception to the Open Meetings Act. 11.C onsider/Discuss/A ction on any items listed on any agenda—work session, regular meeting, or closed session—that is duly posted by the City of Anna for any City C ouncil meeting occurring on the same date as the meeting noticed in this agenda. 12.A djourn. T his is to certify that I , Carrie L . S mith, City S ecretary, posted this agenda at a place readily accessible to the public at the A nna City Hall and on the C ity Hall bulletin board at or before 5:00 p.m. on 22nd day of J une 2017. ___________________________________ Carrie L . Smith, City S ecretary 1. The Council may vote and/or act upon each of the items listed in this agenda. 2. The C ounc il reserves the right to retire into executive session c oncerning any of the items listed on this agenda, whenever it is considered nec essary and legally justified under the Open Meeting Act. 3. Persons with a disability who want to attend this meeting who may need assistanc e should c ontact the City S ec retary at 972 924-3325 two working day s prior to the meeting so that appropriate arrangements c an be made. Item No. 5.a. C ity C ouncil Agenda S taf f R eport Meeting Date: 6/27/2017 AG E ND A IT E M : A pprove City C ouncil Meeting Minutes: May 16, 2017 May 30, 2017 J une 13, 2017 S UM M ARY: S TAF F RE C O M M E ND AT IO N: AT TAC HM E NT S: D escription Upload D ate Type Proposed Minutes 5/16/2017 6/22/2017 Exhibit Proposed Minutes 5/30/2017 6/12/2017 Exhibit Proposed Minutes 6/13/2017 6/22/2017 Exhibit A NNA C I T Y C O UNC I L M INUT E S S P E C I A L ME E T I NG May 16, 2017 T he City C ouncil of the C ity of A nna met in a Special Meeting on the above date at Anna C ity Hall, located at 111 North P owell P arkway (Hwy 5), to consider the f ollowing items. 1.C all to Order. Mayor Crist called the meeting to order at 6:30 p.m. C ouncil Member Martinez was absent. 2.Invocation and P ledge of Allegiance Mayor Crist led the invocation and pledge. 3.C onsider/Discuss/A ction on a R esolution approving the May 6, 2017 General E lection C anvass. (C ity Secretary) a R E S O L UT I O N NO. 2017-05-230 A R E S O L UT I O N O F T HE C I T Y O F A NNA , T E X A S C A NVA S S I NG T HE R E T UR NS O F A G E NE R A L E L E C T I O N O F T W O C I T Y C O UNC I L ME MB E R S , A L L F O R T HR E E-YE A R T E R MS E X P I R I NG MAY 2020. MO T I O N: Council Member B urr moved to approve. Council Member Pelham seconded. Motion carried 6-0. 4.A dministration of the Oath of O f f ice to newly elected Council Members. (City S ecretary) a 5.C onsider/Discuss/A ction on appointment of a Mayor Pro-Tem. (C ity C ouncil) a Council Member Bryan nominated C ouncil Member B urr as Mayor P ro Tem. C ouncil Member P elham seconded. Motion carried 5-0, Burr abstained. 6.C onsider/Discuss/A ction on appointment of a Deputy Mayor P ro-Tem. (C ity C ouncil) a Council Member Bryan nominated C ouncil Member Miller as Deputy Mayor P ro Tem. C ouncil Member B urr seconded. Motion carried 5-0, Miller abstained. 7.Under Tex. Gov't C ode C hapter 551, the C ity Council may enter into closed session to discuss any items listed or referenced on this agenda under the following exceptions: Consult with legal counsel regarding pending or contemplated litigation and/or on matters in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of P rofessional C onduct of the S tate B ar of Texas clearly conflicts with C hapter 551 of the Government C ode (Tex. Gov’t C ode §551.071). a MO T I O N: C ouncil Member Miller moved to enter closed session. Mayor Crist seconded. Motion carried 6-0. Mayor C rist recessed into closed session at 7:00 p.m. Mayor C rist reconvened the regular meeting at 7:30 p.m. 8.I nstitute annexation proceedings with respect to an ordinance annexing approximately 466 acres of land within the J . Chalmers Survey, A bstract No. 0233 and the S . Craft Sr. S urvey No. 0165. (Maurice S chwanke) a MO T I O N: Mayor Crist moved to approve An Ordinance annexing into the City of Anna, Texas the hereinafter described territory adjacent to and adjoining the C ity of A nna, Texas, to wit: being a certain area of land situated in the J . Chalmers Survey, A bstract No. 0233 and the S . C raf t S r. Survey No. 0165, C ounty of Collin, S tate of Texas; amending the official city map; providing f or a service plan; requiring the f iling of this ordinance with the C ollin County C lerk; providing a cumulative repealer clause; providing for severability; providing for engrossment and enrollment; providing f or an effective date"]. I move that the City Council of the C ity of A nna, Texas institute annexation proceedings on the area of land that is the subject of the ordinance,that the Council takes no action on the ordinance today, and that the Council table any action to complete annexation of all or any part of the area of land that is the subject of the ordinance to a future council meeting to occur bef ore the 90th day after today’s date. Council Member P elham seconded. Motion failed 3-3, B eazley, B ryan and Miller opposed. MO T I O N: C ouncil Member Bryan moved to enter closed session. C ouncil Member Miller seconded. Motion carried 6-0. Mayor C rist recessed into closed session at 7:36 p.m. Mayor C rist reconvened the regular session at 8:00 p.m. MO T I O N: C ouncil Member Pelham moved to approve A n Ordinance annexing into the City of A nna, Texas the hereinafter described territory adjacent to and adjoining the C ity of A nna, Texas, to wit: being a certain area of land situated in the J . C halmers S urvey, Abstract No. 0233 and the S. Craft S r. Survey No. 0165, County of C ollin, State of Texas; amending the official city map; providing for a service plan; requiring the filing of this ordinance with the C ollin County C lerk; providing a cumulative repealer clause; providing for severability; providing for engrossment and enrollment; providing f or an effective date"]. I move that the City Council of the C ity of A nna, Texas institute annexation proceedings on the area of land that is the subject of the ordinance,that the Council takes no action on the ordinance today, and that the Council table any action to complete annexation of all or any part of the area of land that is the subject of the ordinance to a future council meeting to occur bef ore the 90th day after today’s date. Mayor Crist seconded. Motion failed 3-3, B eazley, Bryan and Miller opposed. 9.C onsider/Discuss/A ction regarding approval of a Resolution authorizing nomination of a Texas Department of Transportation, Transportation Alternatives S et-A side P rogram P roject. (J oseph J ohnson) a Motion: Council Member B ryan moved to adjourn. Council member Beazley seconded. Motion carried 6-0. Mayor C rist adjourned the meeting at 8:30 p.m. 10.A djourn. Approved on the 22nd day of J une, 2017. ________________________ Mayor Mike C rist AT T E S T: __________________________ C ity Secretary C arrie L . S mith ANNA CITY COUNCIL MINUTES WORK SESSION May 30, 2017 The City Council of the City of Anna met in Work Session on the above date at Anna City Hall, located at 111 North Powell Parkway (Hwy 5), to consider the following items. 1.Call to Order, Roll Call and Establishment of Quorum Mayor Crist called the meeting to order at 6:30 p.m. Council Member's Martinez and Pelham were absent. Council Member Martinez arrived at 6:36 p.m. 2.Briefing/Discussion regarding the FY 17 and preliminary draft FY 18 Budget. (Dana Thornhill) 3.CLOSED SESSION (EXCEPTIONS) Under Tex. Gov't Code Chapter 551, the City Council may enter into closed session to discuss any items listed or referenced on this agenda under the following exceptions: a.Consult with legal counsel regarding pending or contemplated litigation and/or on matters in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with Chapter 551 of the Government Code (Tex. Gov’t Code §551.071). a b.Discuss or deliberate the purchase, exchange, lease, or value of real property (Tex. Gov’t Code §551.072); acquisition of right-of-way, easements, and land for parks and municipal facilities. a c.Discuss or deliberate personnel matters (Tex. Gov’t Code §551.074); City Attorney annual review. a MOTION: Council Member Beazley moved to enter closed session. Mayor Crist seconded. Motion carried 6-0. Mayor Crist recessed the regular meeting at 6:53 p.m. Mayor Crist reconvened the regular meeting at 7:16 p.m. CC Minutes 5/30/2017 Page 1 of 2 The Council further reserves the right to enter into executive session at any time throughout any duly noticed meeting under any applicable exception to the Open Meetings Act. 4. Consider/Discuss/Action on any items listed on any agenda—work session, regular meeting, or closed session—that is duly posted by the City of Anna for any City Council meeting occurring on the same date as the meeting noticed in this agenda. MOTION: Council Member Beazley moved to take no action. Council Member Bryan seconded. Motion carried 6-0. 5. Adjourn. MOTION: Council Member Beazley moved to adjourn. Council Member Bryan seconded. Motion carried 6-0. Mayor Crist adjourned the meeting at 7:17 p.m. Approved on the 13th day of July, 2017. ________________________ Mayor Mike Crist ATTEST: __________________________ City Secretary Carrie L. Smith CC Minutes 5/30/2017 Page 2 of 2 ANNA CITY COUNCIL MINUTES REGULAR SESSION May 30, 2017 1. Call to Order/Roll Call and Establishment of Quorum Mayor Crist called the meeting to order at 7:30 p.m. Council Member Pelham was absent. 2. Invocation and Pledge of Allegiance. Mayor Crist led the invocation and pledge. 3. Citizen Comments. Citizens are allowed three minutes to speak. The Council is unable to respond to or discuss any issues that are brought up during this section that are not on the agenda, other than to make statements of specific factual information in response to a citizen's inquiry or to recite existing policy in response to the inquiry. Jimmy Morgan, 128 Shalom, Anna - requested Council reconsider annexation of Westminister. William Morgan, 2029 Helmoken Falls Dr, Anna - spoke to Council regarding property tax. 4. Receive reports from Staff or the City Council about items of community interest. Items of community interest include: expressions of thanks, congratulations, or condolence; information regarding holiday schedules; an honorary or salutary recognition of a public official, public employee, or other citizen (but not including a change in status of a person's public office or public employment); a reminder about an upcoming event organized or sponsored by the governing body; information regarding a social, ceremonial, or community event organized or sponsored by an entity other than the governing body that was attended or is scheduled to be attended by a member of the governing body or an official or employee of the municipality; and announcements involving an imminent threat to the public health and safety of people in the municipality that has arisen after the posting of the agenda. 5. Consent Items. These items consist of non-controversial or "housekeeping" items required by law. Items may be considered individually by any Council member making CC Minutes 5/30/2017 Page 1 of 4 such request prior to a motion and vote on the Consent Items. a. Approve Council meeting minutes for May 9, 2017. (City Secretary) b. Review minutes from the March 2, 2017 and April 6, 2017 CDC Meetings. (Jessica Perkins) c. Review minutes from the March 2, 2017 and April 6, 2017 EDC Meeting. (Jessica Perkins) d. Resolution approving a Special Event Permit and an Agreement with the Greater Anna Chamber of Commerce for the annual July 4th Fire Works Show. (Maurice Schwanke) RESOLUTION 2017-05-323 RESOLUTION APPROVING A SPECIAL EVENT PERMIT AND AN AGREEMENT BETWEEN THE CITY OF ANNA AND THE GREATER ANNA CHAMBER OF COMMERCE FOR THE 2017 4TH OF JULY FIREWORK DISPLAY. MOTION: Council Member Bryan moved to approve the consent agenda. Council Member Beazley seconded. Motion carried 6-0. 6. Conduct a Public Hearing and take Action on an Ordinance approving a Negotiated Settlement Between the Atmos Cities Steering Committee (“ACSC”) and Atmos Energy Corp., Mid-Tex Division regarding the Company’s 2017 Rate Review Mechanism Filings. (City Manager) a Mayor Crist opened the public hearing at 7:44 p.m. no comments Mayor Crist closed the public hearing at 7:44 p.m. ORDINANCE 745-2017 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ANNA, TEXAS, APPROVING A NEGOTIATED SETTLEMENT BETWEEN THE ATMOS CITIES STEERING COMMITTEE (“ACSC”) AND ATMOS ENERGY CORP., MID-TEX DIVISION REGARDING THE COMPANY’S 2017 RATE REVIEW MECHANISM FILINGS; DECLARING EXISTING RATES TO BE UNREASONABLE; ADOPTING TARIFFS THAT REFLECT RATE ADJUSTMENTS CONSISTENT WITH THE NEGOTIATED SETTLEMENT; FINDING THE RATES TO BE SET BY THE SETTLEMENT TARIFFS TO BE JUST AND REASONABLE AND IN THE PUBLIC INTEREST; REQUIRING RECONCILIATION AND RATE ADJUSTMENTS IF FEDERAL INCOME TAX RATES CHANGE; TERMINATING THE RRM PROCESS FOR 2018 PENDING CC Minutes 5/30/2017 Page 2 of 4 RENEGOTIATION OF RRM TERMS AND CONDITIONS; REQUIRING THE COMPANY TO REIMBURSE ACSC’S REASONABLE RATEMAKING EXPENSES; DETERMINING THAT THIS ORDINANCE WAS PASSED IN ACCORDANCE WITH THE REQUIREMENTS OF THE TEXAS OPEN MEETINGS ACT; ADOPTING A SAVINGS CLAUSE; DECLARING AN EFFECTIVE DATE; AND REQUIRING DELIVERY OF THIS ORDINANCE TO THE COMPANY AND THE ACSC’S LEGAL COUNSEL. MOTION: Council Member Burr moved to approve. Council Member Beazley seconded. Motion carried 6-0. 7. Consider/Discuss/Action on a Resolution approving the submission of an application for the TxDOT Green Ribbon Program. (Maurice Schwanke) a William Morgan, 2029 Helmoken Falls Dr - questions about irrigation in the median. RESOLUTION NO. 2017-05-322 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANNA, TEXAS, APPROVING THE SUBMISSION OF AN APPLICATION TO THE TEXAS DEPARTMENT OF TRANSPORTATION FOR THE GREEN RIBBON GRANT PROGRAM. MOTION: Council Member Burr moved to approve. Council Member Bryan seconded. Motion carried 6-0. 8. CLOSED SESSION (EXECEPTIONS) Under Tex. Gov't Code Chapter 551, the City Council may enter into closed session to discuss any items listed or referenced on this agenda under the following exceptions: a. Consult with legal counsel regarding pending or contemplated litigation and/or on matters in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with Chapter 551 of the Government Code (Tex. Gov’t Code §551.071). a b. Discuss or deliberate the purchase, exchange, lease, or value of real property (Tex. Gov’t Code §551.072); acquisition of right-of-way, easements, and land for parks and municipal facilities. a c. Discuss or deliberate personnel matters (Tex. Gov’t Code §551.074); City Attorney annual review. a Executive Session not held. CC Minutes 5/30/2017 Page 3 of 4 9. Consider/Discuss/Action on any items listed on the posted agenda or any closed session occurring during this meeting, as necessary MOTION: Council Member Beazley moved to take no action. Council Member Miller seconded. Motion carried 6-0 10. Adjourn. MOTION: Council Member Bryan moved to adjourn. Council Member Beazley seconded. Motion carried 6-0. Mayor Crist adjourned the meeting at 8:09 p.m. Approved on the 13th day of June, 2017. ________________________ Mayor Mike Crist ATTEST: __________________________ City Secretary Carrie L. Smith CC Minutes 5/30/2017 Page 4 of 4 A NNA C I T Y C O UNC I L M INUT E S W O R K S E S S I O N J une 13, 2017 T he City C ouncil of the C ity of A nna met in Work S ession on the above date at Anna C ity Hall, located at 111 North P owell P arkway (Hwy 5), to consider the f ollowing items. 1.C all to Order, Roll Call and E stablishment of Quorum Mayor Crist called the meeting to order at 6:30 p.m. A ll Council Members were present. 2.B r iefing/Discussion regarding the F Y 17 and preliminary draft F Y 18 B udgets. (Dana T hornhill) 3.B r iefing/Discussion regarding public education effort on construction of new municipal facilities. (J essica Perkins) 4.C L O S E D S E S S IO N (E X C E P T IO NS ) Under Tex. Gov't Code Chapter 551, the City Council may enter i nto closed session to discuss any items listed or referenced on this agenda under the fol lowing exceptions: a.Consult with legal counsel regarding pending or contemplated litigation and/or on matters in which the duty of the attorney to the governmental body under the Texas D isciplinary Rules of Professional C onduct of the S tate Bar of Texas clearly conflicts with Chapter 551 of the Government Code (Tex. Gov’t Code §551.071). a b.Discuss or deliberate the purchase, exchange, lease, or value of real property (Tex. Gov’t C ode §551.072); acquisition of right-of-way, easements, and land f or parks and municipal f acilities. a c.Discuss or deliberate E conomic Development Negotiations: (1) To discuss or deliberate regarding commercial or f inancial inf ormation that the C ity has received f rom a business prospect that the C ity seeks to have locate, stay, or expand in or near the territory of the City of Anna and with which the City is conducting economic development negotiations; or (2) To deliberate the offer of a financial or other incentive to a business prospect described by subdivision (1). (Tex. G ov’t Code §551.087); discuss lease of property held by Economic Development Corporation. a No executive session. The Council further reserves the right to enter i nto executive session at any time throughout any duly noticed meeting under any applicable exception to the Open Meetings Act. 5.C onsider/Discuss/A ction on any items listed on any agenda—work session, regular meeting, or closed session—that is duly posted by the City of Anna for any City C ouncil meeting occurring on the same date as the meeting noticed in this agenda. No action. 6.A djourn. MO T I O N: Council Member B eazley moved to adjourn the meeting. Council Member Martinez seconded. Motion carried 7-0. Mayor Crist adjourned the meeting at 7:31 p.m. Approved on the 27th day of J une, 2017. ________________________ Mayor Mike C rist AT T E S T: __________________________ C ity Secretary C arrie L . S mith A NNA C I T Y C O UNC I L M INUT E S R E G UL A R S E S S I O N J une 13, 2017 1.C all to Order/Roll Call and E stablishment of Quorum Mayor Crist called the meeting to order at 7:36 p.m. C ouncil Member B eazley was absent. 2.Invocation and P ledge of Allegiance. Mayor Crist led the invocation and pledge. 3.C itizen Comments. Citizens are allowed three mi nutes to speak. The Council is unable to respond to or discuss any issues that are brought up during this section that are not on the agenda, other than to make statements of specific factual information in response to a citizen's inquiry or to recite existing policy in response to the inqui ry. W illiam Morgan - discussed the entrance to Victoria F alls. Mareta S chell - discussed the hazards on 121. 4.Receive reports from S taff or the City C ouncil about items of community interest. Items of community interest include: expressions of thanks, congratulations, or condol ence; information regarding holi day schedules; an honorary or salutary recogni ti on of a public offi cial, public empl oyee, or other citizen (but not incl uding a change in status of a person's publ ic office or publ ic employment); a remi nder about an upcoming event organized or sponsored by the governing body; information regarding a social, ceremonial, or community event organized or sponsored by an entity other than the governing body that was attended or is schedul ed to be attended by a member of the governi ng body or an official or employee of the muni cipality; and announcements i nvolving an imminent threat to the public health and safety of people in the munici pality that has arisen after the posting of the agenda. The City has been awarded the R egional C ooperation Award f rom North Texas C ouncil of Governments. 5.C onsent Items. These items consi st of non-controversial or "housekeeping" items required by law. Items may be considered indivi dual ly by any Council member making such request prior to a motion and vote on the Consent Items. I tems d. and e. were removed f rom the consent agenda. a.Review the minutes of the May 1, 2017 meeting of the P lanning and Z oning Commission. b.Review the minutes of the April 24, 2017 meeting of the P arks A dvisory B oard. c.Resolution approving a R eplat of East F ork E states L ot 21-R1 and L ot 21- R2, B lock A . (Maurice S chwanke) R E S O L UT I O N 2017-06-324 A R E S O L UT I O N O F T HE C I T Y O F A NNA , T E X A S A P P R O V I NG A R E P L AT O F E A S T F O R K E S TAT E S , L O T 21-R1 A ND L O T 21-R 2. MO T I O N: C ouncil Member B ryan moved to approve. Mayor C rist seconded. Motion carried 6-0. d.Resolution approving a development plat of the McCutchen Addition. (Maurice S chwanke) I tem d. was removed f rom the consent agenda. R E S O L UT I O N 2017-06-325 A R E S O L UT I O N O F T HE C I T Y O F A NNA , T E X A S A P P R O V I NG A D E V E L O P ME NT P L AT O F T HE MC C UT C HE N A D D I T I O N MO T I O N: C ouncil Member B ryan moved to approve. Mayor Crist seconded. Motion carried 6-0. e.Resolution approving a final plat of L akeview Estates Phase 2. (Maurice S chwanke) I tem e. was removed f rom the consent agenda. C ouncil Member B eazley arrived at 7:50 p.m. R E S O L UT I O N 2017-06-326 A R E S O L UT I O N O F T HE C I T Y O F A NNA , T E X A S A P P R O V I NG A F I NA L P L AT O F L A K E V I E W E S TAT E S P HA S E 2. MO T I O N: Council Member P elham moved to approve. Council Member Bryan seconded. Motion carried 7-0. f.Resolution approving amendment f our (4) to an inter-local agreement with Collin C ounty f or the provision of ambulance service. (Chief Gothard) R E S O L UT I O N 2017-06-327 A R E S O L UT I O N O F T HE C I T Y O F A NNA, T E X A S A P P R O V I NG A ME ND ME NT F O UR (4) TO A N I NT E R L O C A L A G R E E ME NT W I T H C O L L I N C O UNT Y F O R T HE P R O V I S I O N O F A MB UL A NC E S E RV I C E MO T I O N: C ouncil Member Burr moved to approve consent items a, b, c and f. Council Member Miller seconded. Motion carried 6-0. 6.D emonstration/Discussion of the Automated M etering Infrastructure system and software capabilities. (J oseph J ohnson) a 7.C onsider/Discuss/Action regarding a Resolution appointing a C harter Review C ommission. (City M anager) a R E S O L UT I O N 2017-06-328 A R E S O L UT I O N O F T HE C I T Y O F A NNA, T E X A S A P P O I NT I NG A C HA RT E R R E V I E W C O MMI S S I O N MO T I O N: Council Member Martinez moved to approve. Mayor Crist seconded. Motion carried 7-0. 8.C onsider/Discuss/Action regarding a Resolution changing the names of Axton Ave. and J enkins S treet to C ollin S treet and M cK inney S treet respectively. (M aurice S chwanke) a R E S O L UT I O N 2017-06-329 A R E S O L UT I O N O F T HE C I T Y O F A NNA , T E X A S C HA NG I NG T HE NA ME S O F A X TO N AV E NUE A ND J E NK I NS S T R E E T TO C O L L I N S T R E E T A ND MC K I NNE Y S T R E E T R E S P E C T I V E LY. MO T I O N: Council Member P elham moved to approve. C ouncil Member Miller seconded. Motion carried 7-0. 9.C onsider/Discuss/Action r egarding a Resolution approving a Subdivision Improvement Agreement for Avery Pointe, Phases 4-6. (M aurice S chwanke) a R E S O L UT I O N 2017-06-330 A R E S O L UT I O N O F T HE C I T Y O F A NNA , T E X A S A P P R O V I NG A S UB D I V I S I O N I MP R O V E ME NT A G R E E ME NT W I T H L E NNA R HO ME S O F T E X A S L A ND A ND C O NS T R UC T I O N, LT D., A T E X A S L I MI T E D PA RT NE R S HI P A ND A NNA 455 R E S I D E NT I A L , L P, A T E X A S L I MI T E D PA RT NE R S HI P F O R AV E RY P O I NT E C R O S S I NG, P HA S E S 4-6. MO T I O N: Mayor Crist moved to approve. Council Member B eazley seconded. Motion carried 7-0. 10.C onsider/Discuss/Action regarding a Resolution amending the pay classification plan. (City M anager) a R E S O L UT I O N 2017-06-331 A R E S O L UT I O N O F T HE C I T Y O F A NNA, T E X A S A ME ND I NG T HE PAY C L A S S I F I C AT I O N P L A N. MO T I O N: C ouncil Member P elham moved to approve. Council Member Martinez seconded. Motion carried 7-0. 11.C onsider/Discuss/Action regarding an Ordinance amending Ordinance No. 514-2010, as amended, adopting the amended and updated version of the C ollin County Emergency O perations Plan. (C hief G othard) a O R D I NA NC E 746-2017 A N O R D I NA NC E O F T HE C I T Y O F A NNA , T E X A S, A ME ND I NG O R D I NA NC E NO. 514-2010, A S A ME ND E D B Y O R D I NA NC E NO . 577- 2012 A ND B Y O R D I NA NC E NO. 581-2012, A D O P T I NG T HE A ME ND E D A ND UP D AT E D V E R S I O N O F T HE C O L L I N C O UNT Y E ME R G E NC Y O P E R AT I O NS P L A N; P R O V I D I NG F O R P E NA LT I E S I N A MO UNT S NO T TO E X C E E D $2,000 F O R V I O L AT I O NS; P R O V I D I NG F O R C O NS T R UC T I O N A ND S E V E R A B I L I T Y; A ND P R O V I D I NG A N E F F E C T I V E D AT E. MO T I O N: C ouncil Member B eazley moved to approved. Council Member Bryan seconded. Motion carried 7-0. 12.B r iefing/Discussion regarding utility account security deposit refunds. (D ana T hornhill) a 13.B r iefing/Discussion regar ding residential certificate of occupany inspection program. (City M anager) a 14.B r iefing/Discussion regarding 2017 I C S C C onvention. (M ayor C rist) a 15.D iscussion regarding annual appointments to City boards and commissions. (C ity M anager) a I tem will be brought back at a later date. 16.C L O S E D S E S S IO N (E X E C E P T IO NS ) Under Tex. Gov't Code Chapter 551, the City Council may enter i nto closed session to discuss any items listed or referenced on this agenda under the fol lowing exceptions: a.Consult with legal counsel regarding pending or contemplated litigation and/or on matters in which the duty of the attorney to the governmental body under the Texas D isciplinary Rules of Professional C onduct of the S tate Bar of Texas clearly conflicts with Chapter 551 of the Government Code (Tex. Gov’t Code §551.071). a b.Discuss or deliberate the purchase, exchange, lease, or value of real property (Tex. Gov’t C ode §551.072); acquisition of right-of-way, easements, and land f or parks and municipal f acilities. a c.Discuss or deliberate E conomic Development Negotiations: (1) To discuss or deliberate regarding commercial or f inancial inf ormation that the C ity has received f rom a business prospect that the C ity seeks to have locate, stay, or expand in or near the territory of the City of Anna and with which the City is conducting economic development negotiations; or (2) To deliberate the offer of a financial or other incentive to a business prospect described by subdivision (1). (Tex. G ov’t Code §551.087); discuss lease of property held by Economic Development Corporation. a MO T I O N: Council Member B ryan moved to enter closed session. Council Member Beazley seconded. Motion carried 7-0. Mayor Crist recessed the open meeting at 8:40 p.m. Mayor Crist reconvened the open meeting at 9:07 p.m. MO T I O N: C ouncil Member Bryan moved to reenter closed session. Council Member Miller seconded. Motion carried 7-0. Mayor Crist recessed the open meeting at 10:17 p.m. Mayor Crist reconvened the open meeting at 10:43 p.m. 17.C onsider/Discuss/Action on any items listed on the posted agenda or any closed session occurring during this meeting, as necessary MO T I O N: C ouncil Member P elham moved to take no action. C ouncil Member B eazley seconded. Motion carried 7-0. 18.Adjourn. MO T I O N: Council Member B eazley moved to adjourn. Council Member Miller seconded. Motion carried 7-0. Mayor Crist adjourned the meeting at 10:45 p.m. Approved on the 27th day of J une, 2017. ________________________ Mayor Mike C rist AT T E S T: __________________________ C ity Secretary C arrie L . S mith Item No. 5.b. C ity C ouncil Agenda S taf f R eport Meeting Date: 6/27/2017 AG E ND A IT E M : Review minutes f rom the May 4, 2017 E D C meeting. (J essica P erkins) S UM M ARY: S TAF F RE C O M M E ND AT IO N: AT TAC HM E NT S: D escription Upload D ate Type E D C Minutes 6/21/2017 Backup Material Ann ECONOMIC DEVELOPMENT CORPORATION ANNA ECONOMIC DEVELOPMENT CORPORATION MINUTES May 4,2017 The Economic Development Corporation of the City of Anna met on the above date at Anna City Hall,located at 111 North Powell Parkway (Hwy 5), to consider the following items. Call to Order,Roll Call and Establishment of Quorum Alonzo Tutson,Vice-President,called the meeting to order at 5:30 p.m.After roll call and a declaration that a quorum was present,the floor was open for business. Directors in attendance:Alonzo Tutson,Brent Thomas,Nate Pike and James Gurski Directors in Abstention:Connie Stump,Anthony Richardson and Doug Hermann Staff in attendance:Clark McCoy,legal counsel for the CDC and EDC boards; Jessica Perkins,Chief Administrative Officer. Consider/Discuss/Action approving a resolution authorizing the creation of CCR's (Covenants,Conditions,and Restrictions)for the Anna Business Park. Nate Pike made a motion to approve a resolution authorizing the creation of CCR's. Brent Thomas seconded the motion.Motion passed all. Consider/Discuss/Action approving a resolution authorizing a budget amendment for the current (2016-2017)fiscal year. Brent Thomas made a motion to approve a resolution to amend the current budget.Nate Pike seconded the motion. Motion passed by all. Consider/Discuss/Action regarding minutes from April 6,2017. Motion made by Nate Pike to approve the minutes as written.Seconded by James Gurski.Motion passed by all. Adjourn. Motion was made by Brent Thomas to adjourn and 2nd by James Gurski. Motion passed and meeting was adjourned at 5:38 pm dt^wZT^ Constance Stump,EDC Presiden etta Blacketer,EDC Secretary Item No. 5.c. C ity C ouncil Agenda S taf f R eport Meeting Date: 6/27/2017 AG E ND A IT E M : Review minutes f rom the May 4, 2017 C D C meeting. (J essica Perkins) S UM M ARY: S TAF F RE C O M M E ND AT IO N: AT TAC HM E NT S: D escription Upload D ate Type C D C Minutes 6/21/2017 Backup Material Ann COMMUNITY :=MENT CORPORATION ANNA COMMUNITY DEVELOPMENT CORPORATION MINUTES May4,2017 The Community Development Corporation of the City of Anna met on the above date at Anna City Hall,located at 111 North Powell Parkway (Hwy 5), to consider the following items. 1.Call to Order,Roll Call and Establishment of Quorum Nate Pike,President,called the meeting to order at 5:13 pm.After roll call and the declaration that a quorum was present,the floor was open for business. Directors in-attendance:Alonzo Tutson,Brent Thomas,Nate Pike and James Gurski. Directors Absent:Connie Stump,Anthony Richardson and Doug Hermann Staff in attendance:Clark McCoy,legal counsel for the CDC and EDC boards; Jessica Perkins Chief Administrative Officer 2.Invocation and Pledge Nate Pike gave the invocation and led the group in the Pledge of Allegiance. 3.Consider/Discuss/Action approving a resolution authorizing a current fiscal year (2016-2017)budget amendment. Motion made by Brent Thomas to approve a resolution to amend the 2016-2017 budget seconded by James Gurski.Motion Passed 4.Consider/Discuss/Action approving a resolution authorizing the expenditure of funds for a commercial for sale/advertising sign for the Anna Business Park property. Motion made by Nate Pike to approve a resolution to go with Dave's and not to exceed $4500.00 for the sign. Motion was seconded by Brent Thomas.Motion Passed. 5.Consider/Discuss/Action regarding minutes for April 6,2017. Motion made to approve the minutes as written by James Gurski Seconded by Alonzo Tutson.Motion Passed. 6.Adjourn. Motion made by Nate Pike to adjourn the meeting.Seconded by Alonzo Tutson. Motion passed and meeting adjourned at 5:30 p.m. APPROVED:ATTESTED: awzfr^€^L/^&^) Nathan Pike,CDC President Lauretta Blacketer,CDC Secretary Item No. 6. C ity C ouncil Agenda S taf f R eport Meeting Date: 6/27/2017 AG E ND A IT E M : Consider/Discuss/A ction regarding a Resolution approving an A greement with Municipal Voice. (J essica Perkins) S UM M ARY: T he C ity C ouncil has asked staff to identify a professional firm that can provide the City with public information, marketing, communication and public relations services related to the construction of municipal facilities and the rollout and implementation of the newly-designed C ity of A nna brand identity. City staff has negotiated an A greement with Municipal Voice, a full-service, public relations, communications and marketing company specializing in providing public information, citizen engagement, social media, graphic services, internal communications and all other aspects of communication f or municipal governments. Municipal Voice has demonstrated that they understand our need and that they are knowledgeable, experienced, and well-suited for the task. Municipal Voice has many success stories of educating and engaging the pubic to increase community pride and involvement. S TAF F RE C O M M E ND AT IO N: Staf f recommends approval of the attached R esolution and A greement with Municipal Voice. AT TAC HM E NT S: D escription Upload D ate Type R es. Municipal Voice 6/21/2017 R esolution Exhibit 1 - A greement 6/21/2017 Backup Material CITY OF ANNA, TEXAS RESOLUTION NO. _________ A RESOLUTION OF THE CITY OF ANNA, TEXAS APPROVING AN AGENCY-CLIENT AGREEMENT WITH MUNICIPAL VOICE. WHEREAS, the City Council of the City of Anna, Texas (the “City Council”) has asked Staff to solicit a professional firm that can provide the City with public information, marketing, communication and public relations services related to the construction of a new city hall and other municipal facilities as well as the rollout and implementation of the newly-designed City of Anna branding program; and WHEREAS, Municipal Voice is a full-service, public relations, communications and marketing company specializing in providing public information, citizen engagement, social media, graphic services, internal communications and all other aspects of communication for municipal governments; NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ANNA, TEXAS, THAT: Section 1. Recitals Incorporated. The recitals above are incorporated herein as if set forth in full for all purposes. Section 2. Approval of Agreement. The City Council hereby approves the Agency-Client Agreement with Municipal Voice, attached hereto as Exhibit 1, and authorizes, ratifies and approves the City Manager's execution of same. PASSED AND APPROVED by the City Council of the City of Anna, Texas, on this the 27th day of June, 2017. ATTEST: APPROVED: _____________________________ ____________________________ Carrie L. Smith, City Secretary Mayor, Mike Crist Municipal Voice/City of Anna Agreement 1 1209 Constitution Dr., Suite 100 McKinney, TX 75071 972-623-8836 Agency-Client Agreement June 27, 2017 Jessica Perkins Assistant to the City Manager City of Anna 111 N. Powell Parkway Anna, TX 75409 Via email to: jperkins@annatexas.gov Dear Jessica: Municipal Voice is pleased to have the City of Anna as one of its key clients, and we look forward to a professional relationship that provides the highest in mutual benefit. This letter serves as the agreement between Municipal Voice (“Agency”/”we”) and the City of Anna (“Client”/”you”), under which we are hired to provide you with public information, marketing, communication and public relations services related to the voter election related to a bond issuance to finance the construction of the Anna City Hall and any other municipal facilities along with the rollout of the newly- designated City of Anna branding program. This agreement is open-ended and commences on July 1, 2017. While no specific end-date is defined, this agreement will remain in place until a mutually agreed termination is declared as defined in Section III. I. SERVICES 1. Creative We shall provide such services as set forth in Addendum A attached to this agreement. Addendum A includes a list of specific services that we recognize are direct deliverables to you. Services listed in Addendum A will be undertaken until we receive notice from you or someone you designate to change, modify, delete or initiate a service. Additional services can be added by mutual consent. 2. Reporting We will provide you a monthly activity report at or close to the end of each month the projects are considered active and in progress. The reports will be submitted via email to a person or persons you designate and will be either in outline or narrative form, depending on the appropriateness for that particular month. Exhibit 1 Municipal Voice/City of Anna Agreement 2 II. FINANCIAL ARRANGEMENTS 1. Fees For services provided in Addendum A, we will bill you $1,000 monthly plus expenses as set forth in this agreement. You will receive an invoice on or about the fifteenth day of each month. At any time during the life of this agreement at the request of either party and prior to the end of each period of the agreement, the parties shall discuss any adjustments to the services to be provided and the compensation payable to us. However, until the parties mutually agree on such revised terms, the then-current services and compensation shall remain in effect. 2. Expenses Production Expenses Where we use the services of a supplier to provide services to you, or purchase media on your behalf, and we pay for the services or media instead of you, you agree to pay us the cost of the supplier services. Depending on our scope of work, these services may include mechanical and art costs (including typography, artwork and comprehensive layouts), audiovisual production costs (including video production), research activities (including market research fees, on-line database charges, clipping services, and focus group costs). We shall have the right to require reasonable assurance of the availability of your funds in advance of undertaking commitments on your behalf. We will obtain your authorization before making any commitments for any expenditure in excess of $100 on your behalf. Other Expenses We will also bill you monthly for all incidental and other expenses incurred on your behalf, including, but not limited to, items such as copying, messengers, and printing. 3. Invoice Payment Terms You agree to pay all undisputed invoices within 30 days. We reserve the right to assess a 1- 1/2% per month finance charge for invoices that remain unpaid after 30 days. You also agree to reimburse us for reasonable attorneys’ fees, incurred in the collection of any overdue and unpaid invoices. In the unlikely event that our invoices remain unpaid for more than 30 days, we may also, at our discretion, suspend work on your account. In addition, in the event any invoices become overdue, all subsequent payments may, at our option, first be applied to those invoices, which are overdue for the longest period of time until all payments are up to date. We review each bill for accuracy and value before we send it to you. However, it is important that you also immediately review our bills and approve them for payment. If you cannot approve any portions of our bills, you agree to contact us immediately and to discuss the problem. If you do not inform us of your disapproval of our billings or the overall amount of our ongoing charges, we will continue to provide services in reliance on your implied approval of our billings. III. TERM; TERMINATION Exhibit 1 Municipal Voice/City of Anna Agreement 3 The term of this agreement shall commence as of July 1, 2017 and shall continue indefinitely unless otherwise terminated by either party in accordance with this agreement. This agreement may be terminated by either party by giving 30 days’ prior written notice to the other party, (“the letter of termination”). Our receipt of the letter of termination shall cause a 30-day Notification Period to begin. During the Notification Period, the rights, duties and responsibilities of you and us as Client and Agency shall continue in full force and effect, including, but not limited to, us continuing to be ready and willing to render services on your behalf and the payment of all fees, hourly charges, expenses and other sums as provided in this Agreement. In addition, either party may terminate this agreement if (a) a petition under any bankruptcy law is filed by or against the other party, (b) the other party executes an assignment for the benefit of creditors, (c) a receiver is appointed for the other party’s assets, or (d) the other party becomes insolvent or takes advantage of any insolvency or any similar statute. IV. INDEMNIFICATION Because of your intimate familiarity with your business and the fact that we serve as your agent, we cannot undertake to verify all the facts supplied to us by you. Because of this, you agree to indemnify, defend and hold harmless us from and against all liabilities, losses, damages or expenses, including reasonable attorneys’ fees and costs, which we may incur as the result of any claim, suit or proceeding brought or threatened arising out of the nature or use of your products or services or any assertions we may make on your behalf, including assertions about your organization, your products or services, or about your competitors and any of their products or services, in any materials we may prepare for you, if, and only if, the assertions are based on information, representations, reports, data or releases supplied to us by or through you, or which you approve (excluding claims covered under our indemnity below). Likewise, we will indemnify, defend and hold harmless you and your organization, elected and appointed officials, your employees, officers, directors, shareholders, licensees, representatives and agents against all liabilities, losses, damages or expenses, including reasonable attorneys’ fees and costs, which you or such other party may incur as the result of any claim, suit or proceeding brought or threatened against you pertaining to libel, slander, defamation, copyright infringement, invasion of privacy and/or plagiarism, except to the extent that such claims arise from information or materials supplied by or through you. The obligations to indemnify, defend, and hold harmless set forth in the two paragraphs above shall survive the termination of this agreement for a period of five years. In the event we are called upon to respond to or assist you in connection with litigation commenced or threatened against you by third parties (for example, in complying with a document subpoena), we will be entitled to staff time charges and reimbursement of out- of- pocket expenses for services rendered to you, or time spent by us in connection with such matters. After we have issued material to the press or to another third party, its use is no longer under our control. We cannot assure the use of materials by any media, nor that any information Exhibit 1 Municipal Voice/City of Anna Agreement 4 published will accurately convey the information provided by us. V. CONFIDENTIALITY Each of us agrees to keep confidential and not to disclose or use for its own benefit or for the benefit of any third party (except as may be required for the performance of services under this agreement or as may be required by law), any information, documents or materials which are identified by a party, at the time that they are made available, to be proprietary or confidential. The confidentiality obligations in the preceding sentence, however, shall not extend to any information, documents, or materials that (a) become publicly available without breach of this provision, (b) are received from a third party without restriction, or (c) are independently developed without reference to information received hereunder from the other party, and provided further that such obligations shall expire upon the first anniversary of the effective date of termination of this contract. VI. RETENTION OF MATERIALS Confidential materials provided to us shall be maintained for a period no longer than two years and, thereafter, either returned to you or discarded, as you direct in writing at the end of our business relationship. If you prefer us to adopt a different practice regarding the retention of confidential materials or, for that matter any materials that are provided to us to perform services under this Agreement, please let us know in writing. VII. OWNERSHIP OF MATERIALS We acknowledge and agree that, upon payment of all sums due to us under this Agreement, all photography, brochures, manuals, film, signage, logos, jingles, trademarks, advertising, copyrighted works, and any other materials (collectively referred to as “Materials”) generated by or for us in the performance of this Agreement shall be deemed “work made for hire” and shall, between you and us, be your exclusive property, subject to any third-party rights, restrictions or obligations of which we notify you. Likewise, you acknowledge that we retain ownership of all works of authorship created by or for us prior to or separate from the performance of services under this agreement, including, but not limited to, our proprietary information/services, media lists, and third- party relationships held by us. VIII. AGREEMENT DISCLOSURE We may publicize our agreement to work with you in the form of press releases and announcements and will immediately include your name in our client roster for the purpose of further business development efforts. You will be given reasonable opportunity to review and approve all information pertaining to your organization prior to public disclosure. You may also be requested to participate in additional activities, such as success stories, references and public relations initiatives. IX. DISPUTE RESOLUTION We hope and expect that our relationship will be mutually beneficial and cooperative. However, in the unlikely event that a dispute arises between us, we both agree to make a good faith Exhibit 1 Municipal Voice/City of Anna Agreement 5 effort to resolve our differences by nonbinding mediation before a neutral mediator. Each party shall bear half the costs of mediation. X. GENERAL TERMS Nothing contained in this Agreement shall create any partnership or joint venture between the parties and we shall not be deemed to be your employee. We will be acting as your agent when purchasing materials or services on your behalf, and you agree that all orders placed and contracts entered into by us in accordance with this agreement on your behalf with our suppliers and other persons may so state. You acknowledge that we may from time to time use consultants and/or subcontractors in the performance of our services hereunder. This agreement may not be assigned by either party without the prior written consent of the other, and any such purported assignment shall be void. This agreement is made in Texas and shall be construed and interpreted in accordance with the laws of Texas, applicable to contracts made and to be performed entirely therein. Venue for any litigation arising out of or in connection with this agreement shall be in Collin County, Texas. This document is a complete and exclusive statement of the terms of this agreement and may not be changed orally but only in writing signed by both parties. If any provision of this agreement is found or deemed by a court of competent jurisdiction to be invalid or unenforceable, it shall be considered severable from the remainder of this agreement and shall not cause the remainder to be invalid or unenforceable. In such event, the parties shall reform this agreement to replace such stricken provision with a valid and enforceable provision which comes as close as possible to expressing the intention of the stricken provision. We agree to comply with all federal, state, and local laws, rules, regulations, and ordinances applicable to the work covered hereunder as they may now read or hereinafter be amended. In performing the services required hereunder, we shall not discriminate against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or disability. The captions of this agreement are for informational purposes only, and shall not in any way affect the substantive terms or conditions of this agreement. Please acknowledge your agreement by signing this letter and returning a copy to us. We look forward to a mutually rewarding relationship. Sincerely, Celso I. Martinez President, Municipal Voice Exhibit 1 Municipal Voice/City of Anna Agreement 6 AGREED TO AND ACCEPTED: By: Title: Date: Exhibit 1 Municipal Voice/City of Anna Agreement 7 Addendum A 1. News Releases As the need arises for both the voter election on the bond issuance for the City Hall building and other municipal facilities and the new branding campaign, the appropriate number and type of news releases will be researched and authored. A draft will be submitted for review and approval. The approved news releases will be distributed to local and regional media outlets, including newspapers, radio and television stations, and selected reporters, editors, and publishers. A minimum of two news releases on one or both of these topics will be developed per month. In addition, where necessary, media advisories, fact sheets, talking points and other products will be developed in support of the campaigns. 2. Social media We will make extensive use of social media platforms such as Facebook, Twitter and Instagram (where appropriate) to convey important messages related to the two topics. A separate Facebook page may be created for one or both of the topics to ensure wide dissemination of the material. Occasional original videos will be produced to add impact to these posts. 3. E-mail Marketing On a regular schedule, e-mail marketing campaigns will be sent to the existing subscriber list with news and information related to one or both topics. These e-mail updates will be generated with the concurrence of city staff, and be under the direction of the Assistant to the City Manager. Depending on the amount of information available, these email marketing newsletters may be sent twice a month or more frequently. 4. Advertorials Where and when appropriate a newspaper advertisement will be developed that will include information on one or both of the topics. The ads will be created to adhere to a theme or concept that supports and relates directly to one or both topics. The ads will be created for use in the local weekly newspaper. 5. Updates to Web Site With the assistance of Anna staff, continuous updates to the City website will be part of the campaign, including the addition of news releases, informational documents, and other material intended for external audiences. 6. Advice and Counsel Because of the important role that the Mayor, members of the City Council and staff will play in creating positive publicity for both topics, we will be regularly providing training, advice and Exhibit 1 Municipal Voice/City of Anna Agreement 8 counsel regarding media relations, and public discussion, including development of presentation materials and handouts, where necessary. A speaker’s bureau, town hall meetings, debates and other methods of public outreach will be employed. 7. Other services In addition to these services, other possible avenues for dissemination of news and information regarding the two topics include: Material translated into Spanish where appropriate Active media pitching and placement Event management Crisis communication support Development of “The Anna Committee of 100,” a volunteer advocacy group trained and briefed on various aspects of one or both campaigns Exhibit 1 Item No. 7. C ity C ouncil Agenda S taf f R eport Meeting Date: 6/27/2017 AG E ND A IT E M : Consider/Discuss/A ction regarding a Resolution relating to a 457 D eferred C ompensation P lan. (City Manager) S UM M ARY: F or the past several months, S taff has been evaluating the feasibility of providing an additional retirement investment option for our employees through a 457 deferred compensation plan. A 457 def erred compensation plan allows employees to save and invest money f or retirement with tax benefits. C ontributions are made by individual employees to an account in their name f or the exclusive benefit of the employee and his or her beneficiaries. T he value of the account is based on the contributions made and the investment performance over time. A 457 plan is designed to supplement retirement income. W hile a pension and/or S ocial Security may go a long way, they are unlikely to be enough. S aving to a 457 plan can help employees maintain a desired standard of living. Each employee controls how the account is invested, choosing from options available in the plan. A typical plan includes a wide range of options, from more conservative stable value f unds to more aggressive bond and stock funds. E ach employee may choose to build a diversif ied portf olio of various funds, select a simple yet diversif ied target-date or target-risk f und, or rely on specific investment advice. E mployees can make withdrawals from their account when they leave employment regardless of the reason or years of service. After leaving employment, the assets can also be transferred or rolled over to another eligible retirement plan without being taxed. Staf f is recommending approval of the attached Resolution whcih adopts the I C MA R etirement C orporation (I C MA -R C ) 457 Deferred Compensation Plan and authorizes an Agreement with I C MA-R C to act as the administrator of the plan to perf orm all nondiscretionary functions necessary for the administration of the plan. I C MA -R C is an independent non-prof it financial services corporation focused on providing retirement plans and and related services to more than a million public sector participant accounts and approximately 9,000 retirement plans. VantageTrust is owned by I C MA-R C and is the exclusive brokerage partner that manages the investments of the I C MA-R C 457 plan. W hile participation in the Texas Municipal Retirement System (T MR S ) will remain mandatory for all employees, participation in a 457 deferred compensation plan would be voluntary. T he C ity's HR department would coordinate with I C MA -R C regarding the pre-tax contributions employees may elect to invest in the 457 deferred compensation plan in much the same way we coordinate with T MR S . A ll investment fees and plan administration fees are collected from the investment portf olio of employees who choose to participate in the 457 plan. T he City of Anna would not be charged any f ees by I C MA -R C for the A dministrative S ervices Agreement. S TAF F RE C O M M E ND AT IO N: Staf f recommends approval of the attached Resolution adopting an optional 457 deferred compensation plan f or City employees. AT TAC HM E NT S: D escription Upload D ate Type D eferred Compensation Plan Resolution 6/21/2017 R esolution Exhibit 1, I C MA R C 457 P lan and Trust 6/1/2017 Exhibit Exhibit 2, D eclaration of Trust of VantageTrust 6/1/2017 Exhibit Exhibit 3, A dministrative S ervices Agreement 6/20/2017 Exhibit Vantage Trust F ee Disclosure 6/20/2017 Backup Material CITY OF ANNA, TEXAS RESOLUTION NO. _______________ A RESOLUTION OF THE CITY OF ANNA, TEXAS RELATING TO A 457 DEFERRED COMPENSATION PLAN WHEREAS, the City of Anna, Texas (the “City”) has employees rendering valuable services; and WHEREAS, the establishment of a deferred compensation plan for such employees 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 establishment of a deferred compensation plan to be administered by ICMA Retirement Corporation serves the above objectives; and WHEREAS, the City desires that its deferred compensation plan be administered by ICMA Retirement Corporation, and that some or all of the funds held under such plan be invested in VantageTrust, a trust established by public employers for the collective investment of funds held under their retirement and deferred compensation plans; NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ANNA, TEXAS THAT: The recitals above are incorporated herein as if set forth in full for all Section 1. purposes. The City hereby adopts the deferred compensation plan (the “Plan”) in the Section 2. form of the ICMA Retirement Corporation Deferred Compensation Plan and Trust, attached hereto as Exhibit 1. The City hereby adopts the Declaration of Trust of VantageTrust, attached Section 3. hereto as Exhibit 2, intending this adoption to be operative with respect to any retirement or deferred compensation plan subsequently established by the City, if the assets of the plan are to be invested in VantageTrust. The assets of the Plan shall be held in trust, with the City (or its designate) Section 4. serving as trustee, for the exclusive benefit of the Plan participant and their beneficiaries, and the assets shall not be diverted to any other purpose. The City hereby agrees to serve as trustee under the Plan, until such time Section 5. as it may designate another person or entity to serve as trustee under the Plan. The City Manager shall be the coordinator for this program; shall receive Section 6. necessary reports, notices, etc., from ICMA Retirement Corporation or VantageTrust; shall cast, on behalf of the City, any required votes under VantageTrust; and is authorized to execute all necessary agreements with ICMA Retirement Corporation incidental to the administration of the Plan including the Administrative Services Agreement attached hereto as Exhibit 3. Administrative duties to carry out the Plan may be assigned to the appropriate departments. PASSED AND APPROVED by the City Council of the City of Anna, Texas on this 27th, day of June, 2017. ATTEST: APPROVED: __________________________ __________________________ City Secretary, Carrie L. Smith Mayor, Mike Crist i 457 Governmental Deferred Compensation Plan & Trust 1 DEFERRED COMPENSATION PLAN AND TRUST As Amended and Restated Effective January 1, 2006 Article I. Purpose The Employer hereby establishes and maintains the Employer’s Deferred Compensation Plan and Trust, hereafter referred to as the “Plan.” The Plan consists of the provisions set forth in this document. The primary purpose of this Plan is to provide retirement income and other deferred benefits to the Employees of the Employer and the Employees’ Beneficiaries in accordance with the provisions of Section 457 of the Internal Revenue Code of 1986, as amended (the “Code”). This Plan shall be an agreement solely between the Employer and participating Employees. The Plan and Trust forming a part hereof are established and shall be maintained for the exclusive benefit of Participants and their Beneficiaries. No part of the corpus or income of the Trust shall revert to the Employer or be used for or diverted to purposes other than the exclusive benefit of Participants and their Beneficiaries. Article II. Definitions 2.01 Account. The bookkeeping account maintained for each Participant reflecting the cumulative amount of the Participant’s Deferred Compensation, including any income, gains, losses, or increases or decreases in market value attributable to the Employer’s investment of the Participant’s Deferred Compensation, and further reflecting any distributions to the Participant or the Participant’s Beneficiary and any fees or expenses charged against such Participant’s Deferred Compensation. 2.02 Accounting Date. Each business day that the New York Stock Exchange is open for trading, as provided in Section 6.06 for valuing the Trust’s assets. 2.03 Administrator. The person or persons named in writing to carry out certain nondiscretionary administrative functions under the Plan, as hereinafter described. The Employer may remove any person as Administrator upon 75 days’ advance notice in writing to such person, in which case the Employer shall name another person or persons to act as Administrator. The Administrator may resign upon 75 days’ advance notice in writing to the Employer, in which case the Employer shall name another person or persons to act as Administrator. 2.04 Automatic Distribution Date. April 1 of the calendar year after the Plan Year the Participant attains age 70½ or, if later, has a Severance Event. 2.05 Beneficiary. The person or persons designated by the Participant in his or her Joinder Agreement who shall receive any benefits payable hereunder in the event of the Participant’s death. In the event that the Participant names two or more Beneficiaries, each Beneficiary shall be entitled to equal shares of the benefits payable at the Participant’s death, unless otherwise provided in the Participant’s Joinder Agreement. If no beneficiary is designated in the Joinder Agreement, if the Designated Beneficiary predeceases the Participant, or if the designated Beneficiary does not survive the Participant for a period of fifteen (15) days, then the estate of the Participant shall be the Beneficiary. If a married Participant resides in a community or marital property state, the Participant shall be responsible for obtaining appropriate consent of his or her spouse in the event the Participant designates someone other than his or her spouse as Beneficiary. The preceding sentence shall not apply with respect to a Deemed IRA under Article IX. 2.06 Deemed IRA. A separate account or annuity established under the Plan that complies with the requirements of Section 408(q) of the Code, the Income Tax Regulations thereunder, and any other IRS guidance. 2 2.07 Deferred Compensation. The amount of Includible Compensation otherwise payable to the Participant which the Participant and the Employer mutually agree to defer hereunder, any amount credited to a Participant’s Account by reason of a transfer under Section 6.09 or 6.10, a rollover under Section 6.11, or any other amount which the Employer agrees to credit to a Participant’s Account. 2.08 Dollar Limitation. The applicable dollar amount within the meaning of Section 457(b)(2)(A) of the Code, as adjusted for the cost-of-living in accordance with Section 457(e)(15) of the Code. 2.09 Employee. Any individual who provides services for the Employer, whether as an employee of the Employer or as an independent contractor, and who has been designated by the Employer as eligible to participate in the Plan. 2.10 Employer. ___________________________________, which is a political subdivision, agency or instrumentality of the [State/Commonwealth] of ________________________________, described in Section 457(e)(1)(A) of the Code. 2.11 457 Catch-Up Dollar Limitation. Twice the Dollar Limitation. 2.12 Includible Compensation. Includible Compensation of a Participant means “compensation,” as defined in Section 415(c)(3) of the Code, for services performed for the Employer. Includible Compensation shall be determined without regard to any community property laws. For purposes of a Participant’s Joinder Agreement only and not for purposes of the limitations in Article V, Includible Compensation shall include pre-tax contributions (excluding direct employer contributions) to an integral part trust of the employer providing retiree health care benefits. 2.13 Joinder Agreement. An agreement entered into between an Employee and the Employer, including any amendments or modifications thereof. Such agreement shall fix the amount of Deferred Compensation, specify a preference among the investment alternatives designated by the Employer, designate the Employee’s Beneficiary or Beneficiaries, and incorporate the terms, conditions, and provisions of the Plan by reference. 2.14 Normal Limitation. The maximum amount of Deferred Compensation for any Participant for any taxable year (other than amounts referred to in Sections 6.09, 6.10, and 6.11). 2.15 Normal Retirement Age. Age 70½, unless the Participant has elected an alternate Normal Retirement Age by written instrument delivered to the Administrator prior to a Severance Event. A Participant’s Normal Retirement Age determines the period during which a Participant may utilize the 457 Catch-Up Dollar Limitation of Section 5.02(b) hereunder. Once a Participant has to any extent utilized the catch-up limitation of Section 5.02(b), his Normal Retirement Age may not be changed. A Participant’s alternate Normal Retirement Age may not be earlier than the earliest date that the Participant will become eligible to retire and receive immediate, unreduced retirement benefits under the Employer’s basic defined benefit retirement plan covering the Participant (or a money purchase pension plan in which the Participant also participates if the Participant is not eligible to participate in a defined benefit plan), and may not be later than the date the Participant will attain age 70½. If the Participant will not become eligible to receive benefits under a basic defined benefit retirement plan (or money purchase pension plan, if applicable) maintained by the Employer, the Participant’s alternate Normal Retirement Age may not be earlier than 65 and may not be later than age 70½. In no event may a Participant’s normal retirement age be different than the normal retirement age under the Employer’s other 457(b) plans, if any. In the event the Plan has Participants that include qualified police or firefighters (as defined under Section 415(b)(2) (H)(ii)(I) of the Code), a normal retirement age may be designated for such qualified police or firefighters that is not earlier than age 40 or later than age 70½. Alternatively, qualified police or firefighters may be permitted to designate a normal retirement age that is between age 40 and age 70½. 3 2.16 Participant. Any Employee who has joined the Plan pursuant to the requirements of Article IV. For purposes of section 6.11 of the Plan, the term Participant includes an employee or former Employee of the Employer who has not yet received all of the payments of benefits to which he/she is entitled under the Plan. 2.17 Percentage Limitation. 100 percent of the participant’s Includible Compensation available to be contributed as Deferred Compensation for the taxable year. 2.18 Plan Year. The calendar year. 2.19 Retirement. The first date upon which both of the following shall have occurred with respect to a participant: Severance Event and attainment of age 65. 2.20 Severance Event. A severance of the Participant’s employment with the Employer within the meaning of Section 457(d)(1)(A)(ii) of the Code. In general, a Participant shall be deemed to have experienced a Severance Event for purposes of this Plan when, in accordance with the established practices of the Employer, the employment relationship is considered to have actually terminated. In the case of a Participant who is an independent contractor of the Employer, a Severance Event shall be deemed to have occurred when the Participant’s contract under which services are performed has completely expired and terminated, there is no foreseeable possibility that the Employer will renew the contract or enter into a new contract for the Participant’s services, and it is not anticipated that the Participant will become an Employee of the Employer, or such other events as may be permitted under the Code. 2.21 Trust. The Trust created under Article VI of the Plan which shall consist of all compensation deferred under the Plan, plus any income and gains thereon, less any losses, expenses and distributions to Participants and Beneficiaries. Article III. Administration 3.01 Duties of the Employer. The Employer shall have the authority to make all discretionary decisions affecting the rights or benefits of Participants which may be required in the administration of this Plan. The Employer’s decisions shall be afforded the maximum deference permitted by applicable law. 3.02 Duties of Administrator. The Administrator, as agent for the Employer, shall perform nondiscretionary administrative functions in connection with the Plan, including the maintenance of Participants’ Accounts, the provision of periodic reports of the status of each Account, and the disbursement of benefits on behalf of the Employer in accordance with the provisions of this Plan. Article IV. Participation in the Plan 4.01 Initial Participation. An Employee may become a Participant by entering into a Joinder Agreement prior to the beginning of the calendar month in which the Joinder Agreement is to become effective to defer compensation not yet earned, or such other date as may be permitted under the Code. A new employee may defer compensation in the calendar month during which he or she first becomes an employee if a Joinder Agreement is entered into on or before the first day on which the employee performs services for the Employer. 4.02 Amendment of Joinder Agreement. A Participant may amend an executed Joinder Agreement to change the amount of Includible Compensation not yet earned which is to be deferred (including the reduction of such future deferrals to zero). Such amendment shall become effective as of the beginning of the calendar month commencing after the date the amendment is executed, or such other date as may be permitted under the Code. A Participant may at any time amend his or her Joinder Agreement to change the designated Beneficiary, and such amendment shall become effective immediately. 4 Article V. Limitations on Deferrals 5.01 Normal Limitation. Except as provided in Section 5.02, the maximum amount of Deferred Compensation for any Participant for any taxable year, shall not exceed the lesser of the Dollar Limitation or the Percentage Limitation. 5.02 Catch-Up Limitations. (a) Catch-up Contributions for Participants Age 50 and Over: A Participant who has attained the age of 50 before the close of the Plan Year, and with respect to whom no other elective deferrals may be made to the Plan for the Plan Year by reason of the Normal Limitation of Section 5.01, may enter into a Joinder Agreement to make elective deferrals in addition to those permitted by the Normal Limitation in an amount not to exceed the lesser of: (1) The applicable dollar amount as defined in Section 414(v)(2)(B) of the Code, as adjusted for the cost- of-living in accordance with Section 414(v)(2)(C) of the Code; or (2) The excess (if any) of (i) The Participant’s Includible Compensation for the year, or (ii) Any other elective deferrals of the Participant for such year which are made without regard to this Section 5.02(a). An additional contribution made pursuant to this Section 5.02(a) shall not, with respect to the year in which the contribution is made, be subject to any otherwise applicable limitation contained in Section 5.01 above, or be taken into account in applying such limitation to other contributions or benefits under the Plan or any other plan. This Section 5.02(a) shall not apply in any year to which a higher limit under Section 5.02(b) applies. (b) Last Three Years Catch-up Contribution: For each of the last three (3) taxable years for a Participant ending before his or her attainment of Normal Retirement Age, the maximum amount of Deferred Compensation shall be the lesser of: (1) The 457 Catch-Up Dollar Limitation, or (2) The sum of (i) The Normal Limitation for the taxable year, and (ii) The Normal Limitation for each prior taxable year of the Participant commencing after 1978 less the amount of the Participant’s Deferred Compensation for such prior taxable years. A prior taxable year shall be taken into account under the preceding sentence only if (x) the Participant was eligible to participate in the Plan for such year, and (y) compensation (if any) deferred under the Plan (or such other plan) was subject to the Normal Limitation. 5.03 Sick, Vacation and Back Pay. If the Employer so elects, a Participant may defer all or a portion of the value of the Participant’s accumulated sick pay, accumulated vacation pay and/or back pay, provided that such deferral does not cause total deferrals on behalf of the Participant to exceed the Dollar Limitation or Percentage Limitation (including any Catch-up Dollar Limitation) for the year of deferral. The election to defer such sick, vacation and/or back pay must be made in a manner and at a time permitted under Section 1.457-4(d) of the Income Tax Regulations. For Plan Years beginning before January 1, 2009, pursuant to proposed IRS regulations issued under Section 415 of the Code, the Plan may permit deferrals from compensation, including sick, vacation and back pay, so long as the amounts are paid within 2½ months following severance from employment and the other requirements of Sections 5 457(b) and 415 of the Code are met. For Plan Years beginning on or after January 1, 2009, pursuant to final IRS regulations issued under Section 415 of the Code, the Plan may permit deferrals from compensation, including sick, vacation and back pay, so long as the amounts are paid by the later of: (i) 2½ months following severance from employment, and (ii) the end of the calendar year that includes the date of such severance from employment, and the other requirements of Sections 457(b) and 415 of the Code are met. Additionally, the agreement to defer such amounts must be entered into prior to the first day of the month in which the amounts otherwise would be paid or made available. 5.04 Other Plans. Notwithstanding any provision of the Plan to the contrary, the amount excludible from a Participant’s gross income under this Plan or any other eligible deferred compensation plan under Section 457(b) of the Code shall not exceed the limits set forth in Sections 457(b) and 414(v) of the Code. 5.05 Excess Deferrals. Any amount that exceeds the maximum Dollar Limitation or Percentage Limitation (including any applicable Catch-Up Dollar Limitation) for a taxable year, shall constitute an excess deferral for that taxable year. Any excess deferral shall be distributed in accordance with the requirements for excess deferrals under the Code and Section 1.457-4(e) of the Income Tax Regulations or other applicable Internal Revenue Service guidance. 5.06 Protection of Person Who Serves in a Uniformed Service. An Employee whose employment is interrupted by qualified military service under Section 414(u) of the Code or who is on leave of absence for qualified military service under Section 414(u) of the Code may elect to contribute additional Deferred Compensation upon resumption of employment with the Employer equal to the maximum Deferred Compensation that the Employee could have elected during that period if the Employee’s employment with the Employer had continued (at the same level of Includible Compensation) without the interruption or leave, reduced by Deferred Compensation, if any, actually made for the Employee during the period of the interruption or leave. This right applies for five years following the resumption of employment (or, if sooner, for a period equal to three times the period of the interruption or leave). Article VI. Trust and Investment of Accounts 6.01 Investment of Deferred Compensation. A Trust is hereby created to hold all the assets of the Plan (except Deemed IRA contributions and earnings thereon held pursuant to Article IX) for the exclusive benefit of Participants and Beneficiaries, except that expenses and taxes may be paid from the Trust as provided in Section 6.03. The trustee shall be the Employer or such other person that agrees to act in that capacity hereunder. 6.02 Investment Powers. The trustee or the Administrator, acting as agent for the trustee, shall have the powers listed in this Section with respect to investment of Trust assets, except to the extent that the investment of Trust assets is directed by Participants, pursuant to Section 6.05 or to the extent that such powers are restricted by applicable law. (a) To invest and reinvest the Trust without distinction between principal and income in common or preferred stocks, shares of regulated investment companies and other mutual funds, bonds, loans, notes, debentures, certificates of deposit, contracts with insurance companies including but not limited to insurance, individual or group annuity, deposit administration, guaranteed interest contracts, and deposits at reasonable rates of interest at banking institutions including but not limited to savings accounts and certificates of deposit. Assets of the Trust may be invested in securities that involve a higher degree of risk than investments that have demonstrated their investment performance over an extended period of time. (b) To invest and reinvest all or any part of the assets of the Trust in any common, collective or commingled trust fund that is maintained by a bank or other institution and that is available to Employee plans described under Sections 457 or 401 of the Code, or any successor provisions thereto, and during the period of time that an investment through any such medium shall exist, to the extent of participation of the Plans the declaration of trust of such commonly collective, or commingled trust fund shall constitute a part of this Plan. (c) To invest and reinvest all or any part of the assets of the Trust in any group annuity, deposit administration or guaranteed interest contract issued by an insurance company or other financial institution on a commingled 6 or collective basis with the assets of any other 457 plan or trust qualified under Section 401(a) of the Code or any other plan described in Section 401(a)(24) of the Code, and such contract may be held or issued in the name of the Administrator, or such custodian as the Administrator may appoint, as agent and nominee for the Employer. During the period that an investment through any such contract shall exist, to the extent of participation of the Plan, the terms and conditions of such contract shall constitute a part of the Plan. (d) To hold cash awaiting investment and to keep such portion of the Trust in cash or cash balances, without liability for interest, in such amounts as may from time to time be deemed to be reasonable and necessary to meet obligations under the Plan or otherwise to be in the best interests of the Plan. (e) To hold, to authorize the holding of, and to register any investment to the Trust in the name of the Plan, the Employer, or any nominee or agent of any of the foregoing, including the Administrator, or in bearer form, to deposit or arrange for the deposit of securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by any other person, and to organize corporations or trusts under the laws of any jurisdiction for the purpose of acquiring or holding title to any property for the Trust, all with or without the addition of words or other action to indicate that property is held in a fiduciary or representative capacity but the books and records of the Plan shall at all times show that all such investments are part of the Trust. (f) Upon such terms as may be deemed advisable by the Employer or the Administrator, as the case may be, for the protection of the interests of the Plan or for the preservation of the value of an investment, to exercise and enforce by suit for legal or equitable remedies or by other action, or to waive any right or claim on behalf of the Plan or any default in any obligation owing to the Plan, to renew, extend the time for payment of, agree to a reduction in the rate of interest on, or agree to any other modification or change in the terms of any obligation owing to the Plan, to settle, compromise, adjust, or submit to arbitration any claim or right in favor of or against the Plans to exercise and enforce any and all rights of foreclosure, bid for property in foreclosure, and take a deed in lieu of foreclosure with or without paying consideration therefor, to commence or defend suits or other legal proceedings whenever any interest of the Plan requires it, and to represent the Plan in all suits or legal proceedings in any court of law or equity or before any body or tribunal. (g) To employ suitable consultants, depositories, agents, and legal counsel on behalf of the Plan. (h) To open and maintain any bank account or accounts in the name of the Plan, the Employer, or any nominee or agent of the foregoing, including the Administrator, in any bank or banks. (i) To do any and all other acts that may be deemed necessary to carry out any of the powers set forth herein. 6.03 Taxes and Expenses. All taxes of any and all kinds whatsoever that may be levied or assessed under existing or future laws upon the Plan, or in respect to the Trust, or the income thereof, and all commissions or acquisitions or dispositions of securities and similar expenses of investment and reinvestment of the Trust, shall be paid from the Trust. Such reasonable compensation of the Administrator, as may be agreed upon from time to time by the Employer and the Administrator, and reimbursement for reasonable expenses incurred by the Administrator in performance of its duties hereunder (including but not limited to fees for legal, accounting, investment and custodial services) shall also be paid from the Trust. 6.04 Payment of Benefits. The payment of benefits from the Trust in accordance with the terms of the Plan may be made by the Administrator, or by any custodian or other person so authorized by the Employer to make such disbursement. The Administrator, custodian or other person shall not be liable with respect to any distribution of Trust assets made at the direction of the Employer. 6.05 Investment Funds. In accordance with uniform and nondiscriminatory rules established by the Employer and the Administrator, the Participant may direct his or her Accounts to be invested in one (1) or more investment 7 funds available under the Plan; provided, however, that the Participant’s investment directions shall not violate any investment restrictions established by the Employer. Neither the Employer, the Administrator, nor any other person shall be liable for any losses incurred by virtue of following such directions or with any reasonable administrative delay in implementing such directions. 6.06 Valuation of Accounts. As of each Accounting Date, the Plan assets held in each investment fund offered shall be valued at fair market value and the investment income and gains or losses for each fund shall be determined. Such investment income and gains or losses shall be allocated proportionately among all Account balances on a fund-by- fund basis. The allocation shall be in the proportion that each such Account balance as of the immediately preceding Accounting Date bears to the total of all such Account balances as of that Accounting Date. For purposes of this Article, all Account balances include the Account balances of all Participants and Beneficiaries. 6.07 Participant Loan Accounts. Participant loan accounts shall be invested in accordance with Section 8.03 of the Plan. Such Accounts shall not share in any investment income and gains or losses of the investment funds described in Sections 6.05 and 6.06. 6.08 Crediting of Accounts. The Participant’s Account shall reflect the amount and value of the investments or other property obtained by the Employer through the investment of the Participant’s Deferred Compensation pursuant to Sections 6.05 and 6.06. It is anticipated that the Employer’s investments with respect to a Participant will conform to the investment preference specified in the Participant’s Joinder Agreement, but nothing herein shall be construed to require the Employer to make any particular investment of a Participant’s Deferred Compensation. Each Participant shall receive periodic reports, not less frequently than annually, showing the then current value of his or her Account. 6.09 Post-Severance Transfers Among Eligible Deferred Compensation Plans. (a) Incoming Transfers: A transfer may be accepted from an eligible deferred compensation plan maintained by another employer and credited to a Participant’s or Beneficiary’s Account under the Plan if: (1) In the case of a transfer for a Participant, the Participant has had a Severance Event with that employer and become an Employee of the Employer; (2) The other employer’s plan provides that such transfer will be made; and (3) The Participant or Beneficiary whose deferred amounts are being transferred will have an amount immediately after the transfer at least equal to the deferred amount immediately before the transfer. The Employer may require such documentation from the predecessor plan as it deems necessary to effectuate the transfer in accordance with Section 457(e)(10) of the Code, to confirm that such plan is an eligible deferred compensation plan within the meaning of Section 457(b) of the Code, and to assure that transfers are provided for under such plan. The Employer may refuse to accept a transfer in the form of assets other than cash, unless the Employer and the Administrator agree to hold such other assets under the Plan. (b) Outgoing Transfers: An amount may be transferred to an eligible deferred compensation plan maintained by another employer, and charged to a Participant’s or Beneficiary’s Account under this Plan, if: (1) In the case of a transfer for a Participant, the Participant has a Severance Event with the Employer and becomes an employee of the other employer; (2) The other employer’s plan provides that such transfer will be accepted; (3) The Participant or Beneficiary and the employers have signed such agreements as are necessary to assure that the Employer’s liability to pay benefits to the Participant has been discharged and assumed by the other employer; and 8 (4) The Participant or Beneficiary whose deferred amounts are being transferred will have an amount immediately after the transfer at least equal to the deferred amount immediately before the transfer. The Employer may require such documentation from the other plan as it deems necessary to effectuate the transfer, to confirm that such plan is an eligible deferred compensation plan within the meaning of Section 457(b) of the Code, and to assure that transfers are provided for under such plan. Such transfers shall be made only under such circumstances as are permitted under Section 457 of the Code and the regulations thereunder. 6.10 Transfers Among Eligible Deferred Compensation Plans of the Employer. (a) Incoming Transfers. A transfer may be accepted from another eligible deferred compensation plan maintained by the Employer and credited to a Participant’s or Beneficiary’s Account under the Plan if: (1) The Employer’s other plan provides that such transfer will be made; (2) The Participant or Beneficiary whose deferred amounts are being transferred will have an amount immediately after the transfer at least equal to the deferred amount immediately before the transfer; and (3) The Participant or Beneficiary whose deferred amounts are being transferred is not eligible for additional annual deferrals in the Plan unless the Participant or Beneficiary is performing services for the Employer. (b) Outgoing Transfers. A transfer may be accepted from another eligible deferred compensation plan maintained by the Employer and credited to a Participant’s or Beneficiary’s Account under the Plan if: (1) The Employer’s other plan provides that such transfer will be accepted; (2) The Participant or Beneficiary whose deferred amounts are being transferred will have an amount immediately after the transfer at least equal to the deferred amount immediately before the transfer; and (3) The Participant or Beneficiary whose deferred amounts are being transferred is not eligible for additional annual deferrals in the Employer’s other eligible deferred compensation plan unless the Participant or Beneficiary is performing services for the Employer. 6.11 Eligible Rollover Distributions. (a) Incoming Rollovers: An eligible rollover distribution may be accepted from an eligible retirement plan and credited to a Participant’s Account under the Plan. The Employer may require such documentation from the distributing plan as it deems necessary to effectuate the rollover in accordance with Section 402 of the Code and to confirm that such plan is an eligible retirement plan within the meaning of Section 402(c)(8)(B) of the Code. The Plan shall separately account (in one or more separate accounts) for eligible rollover distributions from any eligible retirement plan. (b) Outgoing Rollovers: Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee’s election under this Section, a distributee may elect, at the time and in the manner prescribed by the Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. (c) Definitions: (1) Eligible Rollover Distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not 9 include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Sections 401(a)(9) and 457(d)(2) of the Code; and any distribution made as a result of an unforeseeable emergency of the employee. For purposes of distributions from other eligible retirement plans rolled over into this Plan, the term eligible rollover distribution shall not include the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities), such as after-tax contributions. (2) Eligible Retirement Plan: An eligible retirement plan is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Sections 403(a) or 403(b) of the Code, a qualified trust described in Section 401(a) of the Code, or an eligible deferred compensation plan described in Section 457(b) of the Code which is maintained by an eligible governmental employer described in Section 457(e)(1) (A) of the Code, that accepts the distributee’s eligible rollover distribution. (3) Distributee: A distributee includes an employee or former employee. In addition, the employee’s or former employee’s surviving spouse and the employee’s or former employee’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. (4) Direct Rollover: A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee. 6.12 Trustee-to-Trustee Transfers to Purchase Permissive Service Credit. All or a portion of a Participant’s Account may be transferred directly to the trustee of a defined benefit governmental plan (as defined in Section 414(d) of the Code) if such transfer is (a) for the purchase of permissive service credit (as defined in Section 415(n)(3) (A) of the Code) under such plan, or (b) a repayment to which Section 415 of the Code does not apply by reason of subsection (k)(3) thereof, within the meaning of Section 457(e)(17) of the Code. 6.13 Treatment of Distributions of Amounts Previously Rolled Over From 401(a) and 403(b) Plans and IRAs. For purposes of Section 72(t) of the Code, a distribution from this Plan shall be treated as a distribution from a qualified retirement plan described in Section 4974(c)(1) of the Code to the extent that such distribution is attributable to an amount transferred to an eligible deferred compensation plan from a qualified retirement plan (as defined in Section 4974(c) of the Code). 6.14 Employer Liability. In no event shall the Employer’s liability to pay benefits to a Participant under this Plan exceed the value of the amounts credited to the Participant’s Account; neither the Employer nor the Administrator shall be liable for losses arising from depreciation or shrinkage in the value of any investments acquired under this Plan. Article VII. Benefits 7.01 Retirement Benefits and Election on Severance Event. (a) General Rule: Except as otherwise provided in this Article VII, the distribution of a Participant’s Account shall commence as of a Participant’s Automatic Distribution Date, and the distribution of such benefits shall be made in accordance with one of the payment options described in Section 7.02. Notwithstanding the foregoing, but subject to the following paragraphs of this Section 7.01, the Participant may elect following a Severance Event to have the distribution of benefits commence on a fixed determinable date other than that described in the preceding sentence, but not later than April l of the year following the year of the Participant’s Retirement or attainment of age 70½, whichever is later. The Participant’s right to change his or her election with respect to commencement of the distribution of benefits shall not be restrained by this Section 7.01. 10 Notwithstanding the foregoing, the Administrator, in order to ensure the orderly administration of this provision, may establish a deadline after which such election to defer the commencement of distribution of benefits shall not be allowed. (b) Loans: Notwithstanding the foregoing provisions of this Section 7.01, no election to defer the commencement of benefits after a Severance Event shall operate to defer the distribution of any amount in the Participant’s loan account in the event of a default of the Participant’s loan. 7.02 Payment Options. As provided in Sections 7.01, 7.04 and 7.05, a Participant may elect to have value of the Participant’s Account distributed in accordance with one of the following payment options, provided that such option is consistent with the limitations set forth in Section 7.03: (a) Equal monthly, quarterly, semi-annual or annual payments in an amount chosen by the Participant, continuing until his or her Account is exhausted; (b) One lump-sum payment; (c) Approximately equal monthly, quarterly, semi-annual or annual payments, calculated to continue for a period certain chosen by the Participant; (d) Annual Payments equal to the minimum distributions required under Section 401(a)(9) of the Code, including the incidental death benefit requirements of Section 401(a)(9)(G), over the life expectancy of the Participant or over the life expectancies of the Participant and his or her Beneficiary; (e) Payments equal to payments made by the issuer of a retirement annuity policy acquired by the Employer; (f) A split distribution under which payments under options (a), (b), (c) or (e) commence or are made at the same time, as elected by the Participant under Section 7.01, provided that all payments commence (or are made) by the latest benefit commencement date permitted under Section 7.01; (g) Any other payment option elected by the Participant and agreed to by the Employer and Administrator. A Participant’s selection of a payment option under Subsections (a), (c), or (g) above may include the selection of an automatic annual cost-of living increase. Such increase will be based on the rise in the Consumer Price Index for All Urban Consumers (CPI-U) from the third quarter of the last year in which a cost-of-living increase was provided to the third quarter of the current year. Any increase will be made in periodic payment checks beginning the following January. 7.03 Limitation on Options. No payment option may be selected by a Participant under subsections 7.02(a) or (c) unless the amount of any installment is not less than $100. No payment option may be selected by a Participant under Sections 7.02, 7.04, or 7.05 unless it satisfies the requirements of Sections 401(a)(9) and 457(d)(2) of the Code, including that payments commencing before the death of the Participant shall satisfy the incidental death benefit requirements under Section 401(a)(9)(G) of the Code. 7.04 Minimum Required Distributions. Notwithstanding any provision of the Plan to the contrary, the Plan shall comply with the minimum required distribution rules set forth in Sections 457(d)(2) and 401(a)(9) of the Code, including the incidental death benefit requirements of Section 401(a)(9)(G) of the Code. 7.05 Post-Retirement Death Benefits. (a) Should the Participant die after he or she has begun to receive benefits under a payment option, the remaining payments, if any, under the payment option shall continue until the Administrator receives notice of the Participant’s death. Upon notification of the Participant’s death, benefits shall be payable to the Participant’s Beneficiary commencing not later than December 31 of the year following the year of the Participant’s death, provided that the Beneficiary may elect to begin benefits earlier than that date. 11 (b) In the event that the Beneficiary dies before the payment of death benefits has commenced or been completed, the remaining benefits payable under the payment option applicable to the Beneficiary shall, subject to the requirements set forth in Section 7.04, be paid to an additional beneficiary designated by the Beneficiary. If no additional beneficiary is named, payment shall be made to the Beneficiary’s estate in a lump sum. (c) In the event that the Participant’s estate is the Beneficiary, payment shall be made to the estate in a lump sum. 7.06 Pre-Retirement Death Benefits. (a) Should the Participant die before he or she has begun to receive the benefits provided by Section 7.01, the value of the Participant’s Account shall be payable to the Beneficiary commencing not later than December 31 of the year following the year of the Participant’s death, provided that the Beneficiary may elect to begin benefits earlier than that date. (b) In the event that the Beneficiary dies before the payment of death benefits has commenced or been completed, the remaining value of the Participant’s Account shall be paid to the estate of the Beneficiary in a lump sum. In the event that the Participant’s estate is the Beneficiary, payment shall be made to the estate in a lump sum. 7.07 Unforeseeable Emergencies. (a) In the event an unforeseeable emergency occurs, a Participant or Beneficiary may apply to the Employer to receive that part of the value of his or her Account that is reasonably needed to satisfy the emergency need. If such an application is approved by the Employer, the Participant or Beneficiary shall be paid only such amount as the Employer deems necessary to meet the emergency need, but payment shall not be made to the extent that the financial hardship may be relieved through cessation of deferral under the Plan, insurance or other reimbursement, or liquidation of other assets to the extent such liquidation would not itself cause severe financial hardship. (b) An unforeseeable emergency shall be deemed to involve only circumstances of severe financial hardship of a Participant or Beneficiary resulting from an illness or accident of the participant or beneficiary, the Participant’s or Beneficiary’s spouse, or the Participant’s or Beneficiary’s dependent (as defined in Section 152 of the Code, and, for taxable years beginning on or after January 1, 2005, without regard to Sections 152(b) (1), (b)(2), and (d)(1)(B) of the Code); loss of the Participant’s or Beneficiary’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by homeowner’s insurance, e.g., as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or the Beneficiary. For example, the imminent foreclosure of or eviction from the Participant’s or Beneficiary’s primary residence may constitute an unforeseeable emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the cost of prescription drug medication, may constitute an unforeseeable emergency. Finally, the need to pay for the funeral expenses of a spouse or a dependent (as defined in section 152 of the Code, and, for taxable years beginning on or after January 1, 2005, without regard to Sections 152(b)(1), (b)(2), and (d)(1)(B) of the Code) may also constitute an unforeseeable emergency. Except as otherwise specifically provided in this Section 7.07(b), the purchase of a home and the payment of college tuition are not unforeseeable emergencies. 7.08 In-Service Distribution of Rollover Contributions. Effective January 1, 2006, the Employer may elect to allow Participants to receive an in-service distribution of amounts attributable to rollover contributions to the Plan. If the Employer has elected to make such distributions available, a Participant that has a separate account attributable to rollover contributions to the Plan may at any time elect to receive a distribution of all or any portion of the amount held in the rollover account. 7.09 In-Service Distribution to Participants Age 70½ or Older. A Participant who has reached age 70½ and has not yet had a Severance Event, may, at any time, request a distribution of all or a part of his or her Account. A Participant may only receive two (2) such distributions pursuant to this Section 7.09 in any calendar year. 12 7.10 Distribution De Minimis Accounts. Notwithstanding the foregoing provisions of this Article VII: (a) Mandatory Distribution. If the value of a Participant’s Account is less than $1,000, the Participant’s Account shall be paid to the Participant in a single lump sum distribution, provided that: (1) No amount has been deferred under the Plan with respect to the Participant during the 2-year period ending on the date of the distribution; and (2) There has been no prior distribution under the Plan to the Participant pursuant to this Section 7.10. (b) Voluntary Distribution. If the value of the Participant’s Account is at least $1,000 but not more than the dollar limit under Section 411(a)(11)(A) of the Code, the Participant may elect to receive his or her entire Account in a lump sum payment if: (1) No amount has been deferred under the Plan with respect to the Participant during the 2-year period ending on the date of the distribution; and (2) There has been no prior distribution under the Plan to the Participant pursuant to this Section 7.10. Article VIII. Loans to Participants 8.01 Availability of Loans to Participants. (a) The Employer may elect to make loans available to Participants in this Plan. If the Employer has elected to make loans available to Participants, a Participant may apply for a loan from the Plan subject to the limitations and other provisions of this Article. However, no loans are available from Deemed IRAs. (b) The Employer shall establish written guidelines governing the granting of loans, provided that such guidelines are approved by the Administrator and are not inconsistent with the provisions of this Article, and that loans are made available to all Participants on a reasonably equivalent basis. 8.02 Terms and Conditions of Loans to Participants. Any loan by the Plan to a Participant under Section 8.01 of the Plan shall satisfy the following requirements: (a) Availability. Loans shall be made available to all Participants on a reasonably equivalent basis. (b) Interest Rate. Loans must be adequately secured and bear a reasonable interest rate. (c) Loan Limit. No Participant loan shall exceed the present value of the Participant’s Account. (d) Foreclosure. In the event of default on any installment payment, the outstanding balance of the loan shall be a deemed distribution. In such event, an actual distribution of a plan loan offset amount will not occur until a distributable event occurs in the Plan. (e) Reduction of Account. Notwithstanding any other provision of this Plan, the portion of the Participant’s Account balance used as a security interest held by the Plan by reason of a loan outstanding to the Participant shall be taken into account for purposes of determining the amount of the Account balance payable at the time of death or distribution, but only if the reduction is used as repayment of the loan. (f) Amount of Loan. At the time the loan is made, the principal amount of the loan plus the outstanding balance (principal plus accrued interest) due on any other outstanding loans to the Participant from the Plan and from all other plans of the Employer that are either eligible deferred compensation plans described in section 457(b) of the Code or qualified employer plans under Section 72(p)(4) of the Code shall not exceed the lesser of: 13 (1) $50,000, reduced by the excess (if any) of (i) The highest outstanding balance of loans from the Plan during the one (1) year period ending on the day before the date on which the loan is made; or (ii) The outstanding balance of loans from the Plan on the date on which such loan is made; or (2) One-half of the value of the Participant’s interest in all of his or her Accounts under this Plan. (g) Application for Loan. The Participant must give the Employer adequate written notice, as determined by the Employer, of the amount and desired time for receiving a loan. No more than one (1) loan may be made by the Plan to a Participant’s in any calendar year. No loan shall be approved if an existing loan from the Plan to the Participant is in default to any extent. (h) Length of Loan. Any loan issued shall require the Participant to repay the loan in substantially equal installments of principal and interest, at least monthly, over a period that does not exceed five (5) years from the date of the loan; provided, however, that if the proceeds of the loan are applied by the Participant to acquire any dwelling unit that is to be used within a reasonable time (determined at the time of the loan is made) after the loan is made as the principal residence of the Participant, the five (5) year limit shall not apply. In this event, the period of repayment shall not exceed a reasonable period determined by the Employer. Principal installments and interest payments otherwise due may be suspended for up to one (1) year during an authorized leave of absence, if the promissory note so provides, but not beyond the original term permitted under this subsection (h), with a revised payment schedule (within such term) instituted at the end of such period of suspension. (i) Prepayment. The Participant shall be permitted to repay the loan in whole or in part at any time prior to maturity, without penalty. (j) Promissory Note. The loan shall be evidenced by a promissory note executed by the Participant and delivered to the Employer, and shall bear interest at a reasonable rate determined by the Employer. (k) Security. The loan shall be secured by an assignment of the participant’s right, title and interest in and to his or her Account. (l) Assignment or Pledge. For the purposes of paragraphs (f) and (g), assignment or pledge of any portion of the Participant’s interest in the Plan and a loan, pledge, or assignment with respect to any insurance contract purchased under the Plan, will be treated as a loan. (m) Other Terms and Conditions. The Employer shall fix such other terms and conditions of the loan as it deems necessary to comply with legal requirements, to maintain the qualification of the Plan and Trust under Section 457 of the Code, or to prevent the treatment of the loan for tax purposes as a distribution to the Participant. The Employer, in its discretion for any reason, may also fix other terms and conditions of the loan, including, but not limited to, the provision of grace periods following an event of default, not inconsistent with the provisions of this Article and Section 72(p) of the Code, and any applicable regulations thereunder. 8.03 Participant Loan Accounts. (a) Upon approval of a loan to a Participant by the Employer, an amount not in excess of the loan shall be transferred from the Participant’s other investment fund(s), described in Section 6.05 of the Plan, to the Participant’s loan account as of the Accounting Date immediately preceding the agreed upon date on which the loan is to be made. 14 (b) The assets of a Participant’s loan account may be invested and reinvested only in promissory notes received by the Plan from the Participant as consideration for a loan permitted by Section 8.01 of the Plan or in cash. Uninvested cash balances in a Participant’s loan account shall not bear interest. Neither the Employer, the Administrator, nor any other person shall be liable for any loss, or by reason of any breach, that results from the Participant’s exercise of such control. (c) Repayment of principal and payment of interest shall be made by payroll deduction or, where repayment cannot be made by payroll deduction, by check, and shall be invested in one (1) or more other investment funds, in accordance with Section 6.05 of the Plan, as of the next Accounting Date after payment thereof to the Trust. The amount so invested shall be deducted from the Participant’s loan account. (d) The Employer shall have the authority to establish other reasonable rules, not inconsistent with the provisions of the Plan, governing the establishment and maintenance of Participant loan accounts. Article IX. Deemed IRAs 9.01 General. This Article IX of the Plan reflects section 602 of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”), as amended by the Job Creation and Worker Assistance Act of 2002. This Article is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder. This Article IX shall supersede the provisions of the Plan to the extent that those provisions are inconsistent with the provisions of this Article IX. Effective for Plan Years beginning after December 31, 2002, the Employer may elect to allow Employees to make voluntary employee contributions to a separate account or annuity established under the Plan that complies with the requirements of Section 408(q) of the Code and any regulations promulgated thereunder (a “Deemed IRA”). The Plan shall establish a separate account for the designated Deemed IRA contributions of each Employee and any earnings properly allocable to the contributions, and maintain separate recordkeeping with respect to each such Deemed IRA. 9.02 Voluntary Employee Contributions. For purposes of this Article, a voluntary employee contribution means any contribution (other than a mandatory contribution within the meaning of Section 411(c)(2) of the Code) that is made by the Employee and which the Employee has designated, at or prior to the time of making the contribution, as a contribution to which this Article applies. 9.03 Deemed IRA Trust Requirements. This Article shall satisfy the trust requirement under Section 408(q) of the Code and the regulations thereto. IRAs established pursuant to this Article shall be held in one or more trusts or custodial accounts (the “Deemed IRA Trusts”), which shall be separate from the Trust established under the Plan to hold contributions other than Deemed IRA contributions. The Deemed IRA Trusts shall satisfy the applicable requirements of Sections 408 and 408A of the Code, which requirements are set forth in section 9.05 and 9.06, respectively, and shall be established with a trustee or custodian meeting the requirements of Section 408(a)(2) of the Code (“Deemed IRA Trustee”). To the extent that the assets of any Deemed IRAs established pursuant to this Article are held in a Deemed IRA Trust satisfying the requirements of this Section 9.03, such Deemed IRA Trust, and any amendments thereto, is hereby adopted as a trust maintained under this Plan with respect to the assets held therein, and the provisions of such Deemed IRA Trust shall control so long as any assets of any Deemed IRA are held thereunder. 9.04 Reporting Duties. The Deemed IRA Trustee shall be subject to the reporting requirements of Section 408(i) of the Code with respect to all Deemed IRAs that are established and maintained under the Plan. 9.05 Deemed Traditional IRA Requirements. Deemed IRAs established in the form of traditional IRAs shall satisfy the following requirements: (a) Exclusive Benefit. The Deemed IRA account shall be established for the exclusive benefit of an Employee or his or her Beneficiaries. 15 (b) Maximum Annual Contributions. (1) Except in the case of a rollover contribution (as permitted by Sections 402(c), 402(e)(6), 403(a)(4), 403(b)(8), 403(b)(10), 408(d)(3) and 457(e)(16) of the Code), no contributions will be accepted unless they are in cash, and the total of such contributions shall not exceed: $3,000 for any taxable year beginning in 2002 through 2004; $4,000 for any taxable year beginning in 2005 through 2007; and $5,000 for any taxable year beginning in 2008 and years thereafter. After 2008, the limit will be adjusted by the Secretary of the Treasury for cost-of-living-increases under Section 219(b)(5)(C) of the Code. Such adjustments will be in multiples of $500. (2) In the case of an Employee who is 50 or older, the annual cash contribution limit is increased by: $500 for any taxable year beginning in 2002 through 2005; and $1,000 for any taxable year beginning in 2006 and thereafter. (3) No contributions will be accepted under a SIMPLE IRA plan established by any employer pursuant to Section 408(p) of the Code. Also, no transfer or rollover of funds attributable to contributions made by a particular employer under its SIMPLE IRA plan will be accepted from a SIMPLE IRA, that is an IRA used in conjunction with a SIMPLE IRA plan, prior to the expiration of the 2-year period beginning on the date the Employee first participated in that employer’s SIMPLE IRA plan. (c) Collectibles. If the Deemed IRA Trust acquires collectibles with within the meaning of Section 408(m) of the Code after December 31, 1981, Deemed IRA Trust assets will be treated as a distribution in an amount equal to the cost of such collectibles. (d) Life Insurance Contracts. No part of the Deemed IRA Trust funds will be invested in life insurance contracts. (e) Minimum Required Distributions. (1) Notwithstanding any provision of this Deemed IRA to the contrary, the distribution of the Employee’s interest in the account shall be made in accordance with the requirements of Section 408(a)(6) of the Code and the Income Tax Regulations thereunder, the provisions of which are herein incorporated by reference. If distributions are made from an annuity contract purchased from an insurance company, distributions thereunder must satisfy the requirements of Q&A-4 of Section 1.401(a)(9)-6T of the Income Tax Regulations (or Section 1.401(a)(9)-6 of the Income Tax Regulations, as applicable), rather than paragraphs (2), (3) and (4) below and Section 9.05(f). The minimum required distributions calculated for this IRA may be withdrawn from another IRA of the Employee in accordance with Q&A-9 of Section 1.408-8 of the Income Tax Regulations. (2) The entire value of the account of the Employee for whose benefit the account is maintained will commence to be distributed no later than the first day of April following the calendar year in which such Employee attains age 70½ (the “required beginning date”) over the life of such Employee or the lives of such Employee and his or her Beneficiary. (3) The amount to be distributed each year, beginning with the calendar year in which the Employee attains age 70½ and continuing through the year of death shall not be less than the quotient obtained by dividing the value of the IRA (as determined under section 9.05(f)(3)) as of the end of the preceding year by the distribution period in the Uniform Lifetime Table in Q&A-2 of Section 401(a) (9)-9 of the Income Tax Regulations, using the Employee’s age of his or her birthday in the year. However, if the Employee’s sole Beneficiary is his or her surviving spouse and such spouse is more than 10 years younger than the Employee, then the distribution period is determined under the Joint 16 and Last Survivor Table in Q&A-3 of Section 1.401(a)(9)-9 of the Income Tax Regulations, using the ages as of the Employee’s and spouse’s birthdays in the year. (4) The required minimum distribution for the year the Employee attains age 70½ can be made as late as April 1 of the following year. The required minimum distribution for any other year must be made by the end of such year. (f) Distribution Upon Death. (1) Death On or After Required Beginning Date. If the Employee dies on or after the required beginning date, the remaining portion of his or her interest will be distributed at least as rapidly as follows: (i) If the Beneficiary is someone other than the Employee’s surviving spouse, the remaining interest will be distributed over the remaining life expectancy of the Beneficiary, with such life expectancy determined using the Beneficiary’s age as of his or her birthday in the year following the year of the Employee’s death, or over the period described in paragraph (1)(iii) below if longer. (ii) If the Employee’s sole Beneficiary is the Employee’s surviving spouse, the remaining interest will be distributed over such spouse’s life or over the period described in paragraph (1)(iii) below if longer. Any interest remaining after such spouse’s death will be distributed over such spouse’s remaining life expectancy determined using the spouse’s age as of his or her birthday in the year of the spouse’s death, or, if the distributions are being made over the period described in paragraph (1)(iii) below, over such period. (iii) If there is no Beneficiary, or if applicable by operation of paragraph (1)(i) or (1)(ii) above, the remaining interest will be distributed over the Employee’s remaining life expectancy determined in the year of the Employee’s death. (iv) The amount to be distributed each year under paragraph (1)(i), (ii), or (iii), beginning with the calendar year following the calendar year of the Employee’s death, is the quotient obtained by dividing the value of the IRA as of the end of the preceding year by the remaining life expectancy specified in such paragraph. Life expectancy is determined using the Single Life Table in Q&A-1 of Section 1.401(a)(9)-9 of the Income Tax Regulations. If distributions are being made to a surviving spouse as the sole Beneficiary, such spouse’s remaining life expectancy for a year is the number in the Single Life Table corresponding to such spouse’s age in the year. In all other cases, remaining life expectancy for a year is the number in the Single Life Table corresponding to the Beneficiary’s or Employee’s age in the year specified in paragraph 1(i), (ii), or (iii) and reduced by 1 for each subsequent year. (2) Death Before Required Beginning Date. If the Employee dies before the required beginning date, his or her entire interest will be distributed at least as rapidly as follows: (i) If the Beneficiary is someone other than the Employee’s surviving spouse, the entire interest will be distributed, starting by the end of the calendar year following the calendar year of the Employee’s death, over the remaining life expectancy of the Beneficiary, with such life expectancy determined using the age of the Beneficiary as of his or her birthday in the year following the year of the Employee’s death, or, if elected, in accordance with paragraph (2)(iii) below. (ii) If the Employee’s sole Beneficiary is the Employee’s surviving spouse, the entire interest will be distributed, starting by the end of the calendar year following the calendar year of the Employee’s death (or by the end of the calendar year in which the Employee would have attained age 70½, if later), over such spouse’s life, or, if elected, in accordance with paragraph (2)(iii) below. If the surviving spouse dies before distributions are required to begin, the 17 remaining interest will be distributed, starting by the end of the calendar year following the calendar year of the spouse’s death, over the spouse’s Beneficiary’s remaining life expectancy determined using such Beneficiary’s age as of his or her birthday in the year following the death of the spouse, or, if elected, will be distributed in accordance with paragraph (2)(iii) below. If the surviving spouse dies after distributions are required to begin, any remaining interest will be distributed over the spouse’s remaining life expectancy determined using the spouse’s age as of his or her birthday in the year of the spouse’s death. (iii) If there is no Beneficiary, or if applicable by operation of paragraph (2)(i) or (2)(ii) above, the entire interest will be distributed by the end of the calendar year containing the fifth anniversary of the Beneficiary’s death (or of the spouse’s death in the case of the surviving spouse’s death before distributions are required to begin under paragraph (2)(ii) above). (iv) The amount to be distributed each year under paragraph (2)(i) or (ii) is the quotient to be obtained by dividing the value of the IRA as of the end of the preceding year by the remaining life expectancy specified in such paragraph. Life expectancy is determined using the Single Life Table in Q&A-1 of Section 1.401(a)(9)-9 of the Income Tax Regulations. If distributions are being made to a surviving spouse as the sole Beneficiary, such spouse’s remaining life expectancy for a year is the number in the Single Life Table corresponding to the Beneficiary’s age in the year specified in paragraph (2)(i) or (ii) and reduced by 1 for each subsequent year. (v) The “value” of the IRA includes the amount of any outstanding rollover, transfer and recharacterization under Q&As-7 and -8 of Section 1.408-8 of the Income Tax Regulations. (vi) If the sole Beneficiary is the Employee’s surviving spouse, the spouse may elect to treat the IRA as his or her own IRA. This election will be deemed to have been made if such surviving spouse makes a contribution to the IRA or fails to take required distributions as a Beneficiary. (g) Nonforfeitable. The interest of an Employee in the balance in his or her Deemed IRA account is nonforfeitable at all times. (h) Reporting. The Deemed IRA Trustee of a Deemed Traditional IRA shall furnish annual calendar-year reports concerning the status of the Deemed IRA account and such information concerning required minimum distributions as is prescribed by the Commissioner of Internal Revenue. (i) Substitution of Deemed IRA Trustee. If the Deemed IRA Trustee is a non-bank trustee or custodian, the non- bank trustee or custodian shall substitute another trustee or custodian if the non-bank trustee or custodian receives notice from the Commissioner of Internal Revenue that such substitution is required because it has failed to comply with the requirements of Section 1.408-2(e) of the Income Tax Regulations and Section 1.408-2T of the Income Tax Regulations. 9.06 Deemed Roth IRA Requirements. Deemed IRAs established in the form of Roth IRAs shall satisfy the following requirements: (a) Exclusive Benefit. The Deemed Roth IRA shall be established for the exclusive benefit of an Employee or his or her Beneficiaries. (b) Maximum Annual Contributions. (1) Maximum Permissible Amount. Except in the case of a qualified rollover contribution or recharacterization (as defined in (6) below), no contribution will be accepted unless it is in cash and the total of such contributions to all the Employee’s Roth IRAs for a taxable year does not exceed 18 the applicable amount (as defined in (2) below), or the Employee’s compensation (as defined in (8) below) if less, for that taxable year. The contribution described in the previous sentence that may not exceed the lesser of the applicable amount or the Employee’s compensation is referred to as a “regular contribution.” A “qualified rollover contribution” is a rollover contribution that meets the requirements of Section 408(d)(3) of the Code, except the one-rollover-per-year rule of Section 408(d)(3)(B) does not apply if the rollover contribution is from another IRA other than a Roth IRA (a “nonRoth IRA”). Contributions may be limited under (3) through (5) below. (2) Applicable Amount. The applicable amount is determined under (i) or (ii) below: (i) If the Employee is under age 50, the applicable amount is: $3,000 for any taxable year beginning in 2002 through 2004; $4,000 for any taxable year beginning in 2005 through 2007; and $5,000 for any taxable year beginning in 2008 and years thereafter. (ii) If the Employee is 50 or older, the applicable amount is: $3,500 for any taxable year beginning in 2002 through 2004; $4,500 for any taxable year beginning in 2005; $5,000 for any taxable year beginning in 2006 through 2007; and $6,000 for any taxable year beginning in 2008 and years thereafter. After 2008, the limits in paragraph (2)(i) and (ii) above will be adjusted by the Secretary of the Treasury for cost-of-living increases under Section 219(b)(5)(C) of the Code. Such adjustments will be in multiples of $500. (3) If (i) and/or (ii) below apply, the maximum regular contribution that can be made to all the Employee’s Roth IRAs for the taxable year is the smaller amount determined under (i) or (ii). (i) The maximum regular contribution is phased out ratably between certain levels of modified adjusted gross income (“modified AGI,” defined in (7) below) in accordance with the following table: Modified AGI Filing Status Full Contribution Phase-out Range No Contribution Single or Head of Household $95,000 or less Between $95,000 and $110,000 $110,000 or more Joint Return or Qualifying Widower $150,000 or less Between $150,000 and $160,000 $160,000 or more Married- Separate Return $0 Between $0 and $10,000 $10,000 or more 19 If the Employee’s modified AGI for a taxable year is in the phase-out range, the maximum regular contribution determined under this table for that taxable year is rounded up to the next multiple of $10 and not reduced below $200. (ii) If the Employee makes regular contributions to both Roth and nonRoth IRAs for a taxable year, the maximum regular contribution that can be made to all the Employee’s Roth IRAs for that taxable year is reduced by the regular contributions made to the Employee’s nonRoth IRAs for the taxable year. (4) Qualified Rollover Contribution Limit. A rollover from a nonRoth IRA cannot be made to this IRA if, for the year the amount is distributed from the nonRoth IRA,(i) the Employee is married and files a separate return, (ii) the Employee is not married and has modified AGI in excess of $100,000 or (iii) the Employee is married and together the Employee and the Employee’s spouse have modified AGI in excess of $100,000. For purposes of the preceding sentence, a husband and wife are not treated as married for a taxable year if they have lived apart at all times during that taxable year and file separate returns for the taxable year. (5) SIMPLE IRA Limits. No contributions will be accepted under a SIMPLE IRA plan established by any employer pursuant to Section 408(p) of the Code. Also, no transfer or rollover of funds attributable to contributions made by a particular employer under its SIMPLE IRA plan will be accepted from a SIMPLE IRA, that is, an IRA used in conjunction with a SIMPLE IRA plan, prior to the expiration of the 2-year period beginning on the date the Employee first participated in that employer’s SIMPLE IRA plan. (6) Recharacterization. A regular contribution to a nonRoth IRA may be recharacterized pursuant to the rules in Section 1.408A-5 of the Income Tax Regulations as a regular contribution to this IRA, subject to the limits in (3) above. (7) Modified AGI. For purposes of (3) and (4) above, an Employee’s modified AGI for a taxable year is defined in Section 408A(c)(3)(C)(i) of the Code and does not include any amount included in adjusted gross income as a result of a rollover from a nonRoth IRA (a “conversion”). (8) Compensation. For purposes of (1) above, compensation is defined as wages, salaries, professional fees, or other amounts derived from or received for personal services actually rendered (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips and bonuses) and includes earned income, as defined in Section 401(c)(2) of the Code (reduced by the deduction the self-employed individual takes for contributions made to a self-employed retirement plan). For purposes of this definition, Section 401(c)(2) of the Code shall be applied as if the term trade or business for purposes of Section 1402 of the Code included service described in subsection (c)(6). Compensation does not include amounts derived from or received as earnings or profits from property (including but not limited to interest and dividends) or amounts not includible in gross income. Compensation also does not include any amount received as a pension or annuity or as deferred compensation. The term “compensation” shall include any amount includible in the Employee’s gross income under Section 71 of the Code with respect to a divorce or separation instrument described in subparagraph (A) of Section 71(b)(2) of the Code In the case of a married Employee filing a joint return, the greater compensation of his or her spouse is treated as his or her own compensation but only to the extent that such spouse’s compensation is not being used for purposes of the spouse making a contribution to a Roth IRA or a deductible contribution to a nonRoth IRA. (c) Collectibles. If the Deemed IRA Trust acquires collectibles within the meaning of Section 408(m) of the Code after December 31, 1981, Deemed IRA Trust assets will be treated as a distribution in an amount equal to the cost of such collectibles. 20 (d) Life Insurance Contracts. No part of the Deemed IRA Trust funds will be invested in life insurance contracts. (e) Distributions Before Death. No amount is required to be distributed prior to the death of the Employee for whose benefit the account was originally established. (f) Minimum Required Distributions. (1) Notwithstanding any provision of this IRA to the contrary, the distribution of the Employee’s interest in the account shall be made in accordance with the requirements of Section 408(a)(6) of the Code, as modified by section 408A(c)(5), and the regulations thereunder, the provisions of which are herein incorporated by reference. If distributions are made from an annuity contract purchased from an insurance company, distributions thereunder must satisfy the requirements of section 1.401(a)(9)-6T of the Temporary Income Tax Regulations (taking into account Section 408A(c)(5) of the Code) (or Section 1.401(a)(9)-6 of the Income Tax Regulations, as applicable), rather than the distribution rules in paragraphs (2), (3) and (4) below. (2) Upon the death of the Employee, his or her entire interest will be distributed at least as rapidly as follows: (i) If the Beneficiary is someone other than the Employee’s surviving spouse, the entire interest will be distributed, starting by the end of the calendar year following the year of the Employee’s death, over the remaining life expectancy of the Beneficiary, with such life expectancy determined using the age of the beneficiary as of his or her birthday in the year following the year of the Employee’s death, or, if elected, in accordance with paragraph (2)(iii) below. (ii) If the Employee’s sole Beneficiary is the Employee’s surviving spouse, the entire interest will be distributed starting by the end of the calendar year following the calendar year of the Employee’s death (or by the end of the calendar year in which the Employee would have attained age 70½, if later), over such spouse’s life, or, if elected, in accordance with paragraph (2)(iii) below. If the surviving spouse dies before distributions are required to begin, the remaining interest will be distributed, starting by the end of the calendar year following the calendar year of the spouse’s death, over the spouse’s Beneficiary’s remaining life expectancy determined using such Beneficiary’s age as of his or her birthday in the year following the death of the spouse, or, if elected, will be distributed in accordance with paragraph (2)(iii) below. If the surviving spouse dies after distributions are required to begin, any remaining interest will be distributed over the spouse’s remaining life expectancy determined using the spouse’s age as of his or her birthday in the year of the spouse’s death. (iii) If there is no Beneficiary, or if applicable by operation of paragraph (2)(i) or (2)(ii) above, the entire interest will be distributed the end of the calendar year containing the fifth anniversary of the Employee’s death (or of the spouse’s death in the case of the surviving spouse’s death before distributions are required to begin under paragraph 2(ii) above). (iv) The amount to be distributed each year under paragraph (2)(i) or (ii) is the quotient obtained by dividing the value of the IRA as of the end of the preceding year by the remaining life expectancy specified in such paragraph. Life expectancy is determined using the Single Life Table in Q&A-1 of Section 1.401(a)(9)-9 of the Income Tax Regulations. If distributions are being made to a surviving spouse as the sole Beneficiary, such spouse’s remaining life expectancy for a year is the number in the Single Life Table corresponding to such spouse’s age in the year. In all other cases, remaining life expectancy for a year is the number in the Single Life Table corresponding to the Beneficiary’s age in the year specified in paragraph (2)(i) or (ii) and reduced by 1 for each subsequent year. 21 (3) The “value” of the IRA includes the amount of any outstanding rollover, transfer and recharacterization under Q&As-7 and -8 of Section 1.408-8 of the Income Tax Regulations. (4) If the sole Beneficiary is the Employee’s surviving spouse, the spouse may elect to treat the IRA as his or her own IRA. This election will be deemed to have been made if such surviving spouse makes a contribution to the IRA or fails to take required distributions as a Beneficiary. (g) Nonforfeitable. The interest of an Employee in the balance in his or her account is nonforfeitable at all times. (h) Reporting. The Deemed IRA Trustee of a Deemed Roth IRA shall furnish annual calendar-year reports concerning the status of the Deemed IRA account and such information concerning required minimum distributions as is prescribed by the Commissioner of Internal Revenue. (i) Substitution of Deemed IRA Trustee. If the Deemed IRA Trustee is a non-bank trustee or custodian, the non- bank trustee or custodian shall substitute another trustee or custodian if the non-bank trustee or custodian receives notice from the Commissioner of Internal Revenue that such substitution is required because it has failed to comply with the requirements of Section 1.408-2(e) of the Income Tax Regulations and Section 1.408-2T of the Income Tax Regulations. Article X. Non-Assignability 10.01 General. Except as provided in Article VIII and Section 10.02, no Participant or Beneficiary shall have any right to commute, sell, assign, pledge, transfer or otherwise convey or encumber the right to receive any payments hereunder, which payments and rights are expressly declared to be non-assignable and non-transferable. 10.02 Domestic Relations Orders. (a) Allowance of Transfers: To the extent required under a final judgment, decree, or order (including approval of a property settlement agreement) that (1) relates to the provision of child support, alimony payments, or marital property rights and (2) is made pursuant to a state domestic relations law, and (3) is permitted under Sections 414(p)(11) and (12) of the Code, any portion of a Participant’s Account may be paid or set aside for payment to a spouse, former spouse, child, or other dependent of the Participant (an “Alternate Payee”). Where necessary to carry out the terms of such an order, a separate Account shall be established with respect to the Alternate Payee who shall be entitled to make investment selections with respect thereto in the same manner as the Participant. Any amount so set aside for an Alternate Payee shall be paid in accordance with the form and timing of payment specified in the order. Nothing in this Section shall be construed to authorize any amount to be distributed under the Plan at a time or in a form that is not permitted under Section 457(b) of the Code and is explicitly permitted under the uniform procedures described in Section 10.2(d) below. Notwithstanding the foregoing sentence, if a judgment, decree or order (including approval of a property settlement agreement) that relates to the provision of child support, alimony payments, or the marital property rights of a spouse or former spouse, child, or other dependent of a Participant is made pursuant to the domestic relations law of any State, then the amount of the Participant’s Account shall be paid in the manner and to the person or persons so directed in the domestic relations order. Such payment shall be made without regard to whether the Participant is eligible for a distribution of benefits under the Plan. The Administrator shall establish reasonable procedures for determining the status of any such decree or order and for effectuating distribution pursuant to the domestic relations order. Any payment made to a person pursuant to this Section shall be reduced by any required income tax withholding. (b) Release from Liability to Participant: The Employer’s liability to pay benefits to a Participant shall be reduced to the extent that amounts have been paid or set aside for payment to an Alternate Payee to paragraph (a) of this Section and the Participant and his or her Beneficiaries shall be deemed to have released the Employer and the Plan Administrator from any claim with respect to such amounts. 22 (c) Participation in Legal Proceedings: The Employer and Administrator shall not be obligated to defend against or set aside any judgment, decree, or order described in paragraph (a) or any legal order relating to the garnishment of a Participant’s benefits, unless the full expense of such legal action is borne by the Participant. In the event that the Participant’s action (or inaction) nonetheless causes the Employer or Administrator to incur such expense, the amount of the expense may be charged against the Participant’s Account and thereby reduce the Employer’s obligation to pay benefits to the Participant. In the course of any proceeding relating to divorce, separation, or child support, the Employer and Administrator shall be authorized to disclose information relating to the Participant’s Account to the Alternate Payee (including the legal representatives of the Alternate Payee), or to a court. (d) Determination of Validity of Domestic Relations Orders: The Administrator shall establish uniform procedures for determining the validity of any domestic relations order. The Administrator’s determinations under such procedures shall be conclusive and binding on all parties and shall be afforded the maximum amount of deference permitted by law. 10.03 IRS Levy. Notwithstanding Section 10.01, the Administrator may pay from a Participant’s or Beneficiary’s Account balance the amount that the Administrator finds is lawfully demanded under a levy issued by the Internal Revenue Service with respect to that Participant or Beneficiary or is sought to be collected by the United States Government under a judgment resulting from an unpaid tax assessment against the Participant or Beneficiary. 10.04 Mistaken Contribution. To the extent permitted by applicable law, if any contribution (or any portion of a contribution) is made to the Plan by a good faith mistake of fact, then after the payment of the contribution, and upon receipt in good order of a proper request approved by the Administrator, the amount of the mistaken contribution (adjusted for any income or loss in value, if any, allocable thereto) shall be returned directly to the Participant or, to the extent required or permitted by the Administrator, to the Employer. 10.05 Payments to Minors and Incompetents. If a Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is adjudged to be legally incapable if giving valid receipt and discharge for such benefits, or is deemed so by the Administrator, benefits will be paid to such persons as the Administrator may designate for the benefit of such Participant or Beneficiary. Such payments shall be considered a payment to such Participant or Beneficiary and shall, to the extent made, be deemed a complete discharge of any liability for such payments under the Plan. 10.06 Procedure When Distributee Cannot Be Located. The Administrator shall make all reasonable attempts to determine the identity and address of a Participant or a Participant’s Beneficiary entitled to benefits under the Plan. For this purpose, a reasonable attempt means (a) the mailing by certified mail of a notice to the last known address shown on the Employer or Administrator’s records, (b) notification sent to the Social Security Administration or the Pension Benefit Guarantee Corporation (under their program to identify payees under retirement plans), and (c) the payee has not responded within 6 months. If the Administrator is unable to locate such a person entitled to benefits hereunder, or if there has been no claim made for such benefits, the Trust shall continue to hold the benefits due such person. Article XI. Relationship to Other Plans and Employment Agreements This Plan serves in addition to any other retirement, pension, or benefit plan or system presently in existence or hereinafter established for the benefit of the Employer’s employees, and participation hereunder shall not affect benefits receivable under any such plan or system. Nothing contained in this Plan shall be deemed to constitute an employment contract or agreement between any Participant and the Employer or to give any Participant the right to be retained in the employ of the Employer. Nor shall anything herein be construed to modify the terms of any employment contract or agreement between a Participant and the Employer. Article XII. Amendment or Termination of Plan The Employer may at any time amend this Plan provided that it transmits such amendment in writing to the Administrator at least 30 days prior to the effective date of the amendment. The consent of the Administrator shall not be required in order for 23 such amendment to become effective, but the Administrator shall be under no obligation to continue acting as Administrator hereunder if it disapproves of such amendment. The Administrator may at any time propose an amendment to the Plan by an instrument in writing transmitted to the Employer at least 30 days before the effective date of the amendment. Such amendment shall become effective unless, within such 30-day period, the Employer notifies the Administrator in writing that it disapproves such amendment, in which case such amendment shall not become effective. In the event of such disapproval, the Administrator shall be under no obligation to continue acting as Administrator hereunder. The Employer may at any time terminate this Plan. In the event of termination, assets of the Plan shall be distributed to Participants and Beneficiaries as soon as administratively practicable following termination of the Plan. Alternatively, assets of the Plan may be transferred to an eligible deferred compensation plan maintained by another eligible governmental employer within the same State if (a) all assets held by the Plan (other than Deemed IRAs) are transferred; (b) the receiving plan provides for the receipt of transfers; (c) the Participants and Beneficiaries whose deferred amounts are being transferred will have an amount immediately after the transfer at least equal to the deferred amount immediately before the transfer; and (d) the Participants or Beneficiaries whose deferred amounts are being transferred is not eligible for additional annual deferrals in the receiving plan unless the Participants or Beneficiaries are performing services for the employer maintaining the receiving plan. Except as may be required to maintain the status of the Plan as an eligible deferred compensation plan under Section 457(b) of the Code or to comply with other applicable laws, no amendment or termination of the Plan shall divest any Participant of any rights with respect to compensation deferred before the date of the amendment or termination. Article XIII. Applicable Law This Plan and Trust shall be construed under the laws of the state where the Employer is located and is established with the intent that it meet the requirements of an “eligible deferred compensation plan” under Section 457(b) of the Code, as amended. The provisions of this Plan and Trust shall be interpreted wherever possible in conformity with the requirements of that Section of the Code. In addition, notwithstanding any provision of the Plan to the contrary, the Plan shall be administered in compliance with the requirements of Section 414(u) of the Code. Article XIV. Gender and Number The masculine pronoun, whenever used herein, shall include the feminine pronoun, and the singular shall include the plural, except where the context requires otherwise. 1 DECLARATION OF TRUST This Declaration of Trust (the “Group Trust Agreement”) is made as of the 19th day of May, 2001, by VantageTrust Company, which declares itself to be the sole Trustee of the trust hereby created. WHEREAS, the ICMA Retirement Trust was created as a vehicle for the commingling of the assets of governmental plans and governmental units described in Section 818(a)(6) of the Internal Revenue Code of 1986, as amended, pursuant to a Declaration of Trust dated October 4, 1982, as subsequently amended, a copy of which is attached hereto and incorporated by reference as set out below (the “ICMA Declaration”); and WHEREAS, the trust created hereunder (the “Group Trust”) is intended to meet the requirements of Revenue Ruling 81- 100, 1981-1 C.B. 326, and is established as a common trust fund within the meaning of Section 391:1 of Title 35 of the New Hampshire Revised Statutes Annotated, to accept and hold for investment purposes the assets of the Deferred Compensation and Qualified Plans held by and through the ICMA Retirement Trust. NOW, THEREFORE, the Group Trust is created by the execution of this Declaration of Trust by the Trustee and is established with respect to each Deferred Compensation and Qualified Plan by the transfer to the Trustee of such Plan’s assets in the ICMA Retirement Trust, by the Trustees thereof, in accord with the following provisions: (a) Incorporation of ICMA Declaration by Reference; ICMA By-Laws. Except as otherwise provided in this Group Trust Agreement, and to the extent not inconsistent herewith, all provisions of the ICMA Declaration are incorporated herein by reference and made a part hereof, to be read by substituting the Group Trust for the Retirement Trust and the Trustee for the Board of Trustees referenced therein. In this respect, unless the context clearly indicates otherwise, all capitalized terms used herein and defined in the ICMA Declaration have the meanings assigned to them in the ICMA Declaration. In addition, the By-Laws of the ICMA Retirement Trust, as the same may be amended from time-to-time, are adopted as the By-Laws of the Group Trust to the extent not inconsistent with the terms of this Group Trust Agreement. Notwithstanding the foregoing, the terms of the ICMA Declaration and By-Laws are further modified with respect to the Group Trust created hereunder, as follows: 1. any reporting, distribution, or other obligation of the Group Trust vis-à-vis any Deferred Compensation Plan, Qualified Plan, Public Employer, Public Employer Trustee, or Employer Trust shall be deemed satisfied to the extent that such obligation is undertaken by the ICMA Retirement Trust (in which case the obligation of the Group Trust shall run to the ICMA Retirement Trust); and 2. all provisions dealing with the number, qualification, election, term and nomination of Trustees shall not apply, and all other provisions relating to trustees (including, but not limited to, resignation and removal) shall be interpreted in a manner consistent with the appointment of a single corporate trustee. (b) Compliance with Revenue Procedure 81-100. The requirements of Revenue Procedure 81-100 are applicable to the Group Trust as follows: 1. Pursuant to the terms of this Group Trust Agreement and Article X of the By-Laws, investment in the Group Trust is limited to assets of Deferred Compensation and Qualified Plans, investing through the ICMA Retirement Trust. 2. Pursuant to the By-Laws, the Group Trust is adopted as a part of each Qualified Plan that invests herein through the ICMA Retirement Trust. 3. In accord with the By-Laws, that part of the Group Trust’s corpus or income which equitably belongs to any Deferred Compensation and Qualified Plan may not be used for or diverted to any purposes other than for the exclusive benefit of the Plan’s employees or their beneficiaries who are entitled to benefits under such Plan. 2 4. In accord with the By-Laws, no Deferred Compensation Plan or Qualified Plan may assign any or part of its equity or interest in the Group Trust, and any purported assignment of such equity or interest shall be void. (c) Governing Law. Except as otherwise required by federal, state or local law, this Declaration of Trust (including the ICMA Declaration to the extent incorporated herein) and the Group Trust created hereunder shall be construed and determined in accordance with applicable laws of the State of New Hampshire. (d) Judicial Proceedings. The Trustee may at any time initiate an action or proceeding in the appropriate state or federal courts within or outside the state of New Hampshire for the settlement of its accounts or for the determination of any question of construction which may arise or for instructions. IN WITNESS WHEREOF, the Trustee has executed this Declaration of Trust as of the day and year first above written. VANTAGETRUST COMPANY By: Name: Angela Montez Title: Assistant Secretary 3 ATTn.: ReCoRDs MAnAGeMenT UniT P.o. Box 96220 WAshinGTon, DC 20090-6220 1-800-669-7400 WWW.iCMARC.oRG en esPAñol llAMe Al 1-800-669-8216 BKT000-014-200902-454 iCMA-RC services llC, a wholly owned broker-dealer subsidiary of iCMA-RC, member FinRA/siPC. 1 DECLARATION OF TRUST This Declaration of Trust (the “Group Trust Agreement”) is made as of the 19th day of May, 2001, by VantageTrust Company, which declares itself to be the sole Trustee of the trust hereby created. WHEREAS, the ICMA Retirement Trust was created as a vehicle for the commingling of the assets of governmental plans and governmental units described in Section 818(a)(6) of the Internal Revenue Code of 1986, as amended, pursuant to a Declaration of Trust dated October 4, 1982, as subsequently amended, a copy of which is attached hereto and incorporated by reference as set out below (the “ICMA Declaration”); and WHEREAS, the trust created hereunder (the “Group Trust”) is intended to meet the requirements of Revenue Ruling 81- 100, 1981-1 C.B. 326, and is established as a common trust fund within the meaning of Section 391:1 of Title 35 of the New Hampshire Revised Statutes Annotated, to accept and hold for investment purposes the assets of the Deferred Compensation and Qualified Plans held by and through the ICMA Retirement Trust. NOW, THEREFORE, the Group Trust is created by the execution of this Declaration of Trust by the Trustee and is established with respect to each Deferred Compensation and Qualified Plan by the transfer to the Trustee of such Plan’s assets in the ICMA Retirement Trust, by the Trustees thereof, in accord with the following provisions: (a) Incorporation of ICMA Declaration by Reference; ICMA By-Laws. Except as otherwise provided in this Group Trust Agreement, and to the extent not inconsistent herewith, all provisions of the ICMA Declaration are incorporated herein by reference and made a part hereof, to be read by substituting the Group Trust for the Retirement Trust and the Trustee for the Board of Trustees referenced therein. In this respect, unless the context clearly indicates otherwise, all capitalized terms used herein and defined in the ICMA Declaration have the meanings assigned to them in the ICMA Declaration. In addition, the By-Laws of the ICMA Retirement Trust, as the same may be amended from time-to-time, are adopted as the By-Laws of the Group Trust to the extent not inconsistent with the terms of this Group Trust Agreement. Notwithstanding the foregoing, the terms of the ICMA Declaration and By-Laws are further modified with respect to the Group Trust created hereunder, as follows: 1. any reporting, distribution, or other obligation of the Group Trust vis-à-vis any Deferred Compensation Plan, Qualified Plan, Public Employer, Public Employer Trustee, or Employer Trust shall be deemed satisfied to the extent that such obligation is undertaken by the ICMA Retirement Trust (in which case the obligation of the Group Trust shall run to the ICMA Retirement Trust); and 2. all provisions dealing with the number, qualification, election, term and nomination of Trustees shall not apply, and all other provisions relating to trustees (including, but not limited to, resignation and removal) shall be interpreted in a manner consistent with the appointment of a single corporate trustee. (b) Compliance with Revenue Procedure 81-100. The requirements of Revenue Procedure 81-100 are applicable to the Group Trust as follows: 1. Pursuant to the terms of this Group Trust Agreement and Article X of the By-Laws, investment in the Group Trust is limited to assets of Deferred Compensation and Qualified Plans, investing through the ICMA Retirement Trust. 2. Pursuant to the By-Laws, the Group Trust is adopted as a part of each Qualified Plan that invests herein through the ICMA Retirement Trust. 3. In accord with the By-Laws, that part of the Group Trust’s corpus or income which equitably belongs to any Deferred Compensation and Qualified Plan may not be used for or diverted to any purposes other than for the exclusive benefit of the Plan’s employees or their beneficiaries who are entitled to benefits under such Plan. 2 4. In accord with the By-Laws, no Deferred Compensation Plan or Qualified Plan may assign any or part of its equity or interest in the Group Trust, and any purported assignment of such equity or interest shall be void. (c) Governing Law. Except as otherwise required by federal, state or local law, this Declaration of Trust (including the ICMA Declaration to the extent incorporated herein) and the Group Trust created hereunder shall be construed and determined in accordance with applicable laws of the State of New Hampshire. (d) Judicial Proceedings. The Trustee may at any time initiate an action or proceeding in the appropriate state or federal courts within or outside the state of New Hampshire for the settlement of its accounts or for the determination of any question of construction which may arise or for instructions. IN WITNESS WHEREOF, the Trustee has executed this Declaration of Trust as of the day and year first above written. VANTAGETRUST COMPANY By: Name: Angela Montez Title: Assistant Secretary VantageTrust Funds Fund Fee Disclosure Data as of March 31, 2017 Fund Name Asset Category1 Gross Expense Waiver Net Expense Waiver Expiration Date Redemption Fee2 Trading Restriction3 Stable Value/Cash Management VantageTrust PLUS Fund 4 Stable Value 1.36% 0.00% 1.36% ------ 90-day Wash VantageTrust Cash Management Fund 5 Money Market 0.98% 0.00% 0.98% ------ --- Bond Funds VT Vantagepoint Inflation Focus Fund 6 Inflation-Protected Bond 1.20% 0.00% 1.20% ------ --- VT Vantagepoint Core Bond Index Fund 6 Intermediate-Term Bond 1.00% 0.05% 0.95% April 30, 2017 --- --- VT Western Assets Core Plus Bond Fund 6 Intermediate-Term Bond 1.07% 0.07% 1.00% December 31, 2017 --- --- VT PIMCO High Yield Fund 7 High Yield Bond 1.36% --- --- ------ --- Guaranteed Lifetime Income Funds VT Retirement IncomeAdvantage Fund 8 N/A 2.26% 0.00% 2.26% ------ 90-day Wash Asset Allocation/Balanced Funds VT Vantagepoint Milestone Retirement Income Fund 9 Target-Date Retirement 1.32% 0.00% 1.32% ------ --- VT Vantagepoint Milestone 2010 Fund 9 Target-Date 2000-2010 1.32% 0.00% 1.32% ------ --- VT Vantagepoint Milestone 2015 Fund 9 Target-Date 2015 1.33% 0.00% 1.33% ------ --- VT Vantagepoint Milestone 2020 Fund 9 Target-Date 2020 1.34% 0.00% 1.34% ------ --- VT Vantagepoint Milestone 2025 Fund 9 Target-Date 2025 1.35% 0.00% 1.35% ------ --- VT Vantagepoint Milestone 2030 Fund 9 Target-Date 2030 1.37% 0.00% 1.37% ------ --- VT Vantagepoint Milestone 2035 Fund 9 Target-Date 2035 1.39% 0.00% 1.39% ------ --- VT Vantagepoint Milestone 2040 Fund 9 Target-Date 2040 1.41% 0.00% 1.41% ------ --- VT Vantagepoint Milestone 2045 Fund 9 Target-Date 2045 1.42% 0.00% 1.42% ------ --- VT Vantagepoint Milestone 2050 Fund 9 Target-Date 2050 1.44% 0.00% 1.44% ------ --- VT Vantagepoint Milestone 2055 Fund 9 Target-Date 2055 2.97% 1.43% 1.54% April 30, 2017 VT Vantagepoint Model Port Conser Growth Fund Allocation--30% to 50% Equity 1.37% 0.00% 1.37% ------ --- VT Vantagepoint Model Port Tradit Growth Fund Allocation--50% to 70% Equity 1.39% 0.00% 1.39% ------ --- VT Vantagepoint Model Port Long-Term Growth Fund Allocation--70% to 85% Equity 1.44% 0.00% 1.44% ------ --- VT Vantagepoint Model Port Glbl Eqty Growth Fund 15 World Stock 1.47% 0.00% 1.47% ------ --- VT Puritan® Fund 10 Allocation--50% to 70% Equity 1.11% 0.00% 1.11% ------ --- U.S. Stock Funds VT Vantagepoint Equity Income Fund 11 Large Value 1.27% 0.00% 1.27% ------ --- VT Invesco Diversified Dividend Fund 11 Large Value 1.14% 0.02% 1.12% June 30, 2018 31 days, any $ VT AllianzGI NFJ Dividend Value Fund 11 Large Value 1.53% 0.15% 1.38% October 31, 2017 --- --- VT Vantagepoint 500 Stock Index Fund Large Blend 0.99% 0.05% 0.94% April 30, 2017 --- --- VT Vantagepoint Broad Market Index Fund Large Blend 0.99% 0.05% 0.94% April 30, 2017 --- --- VT Parnassus Core Equity Fund Large Blend 1.43% 0.01% 1.42% May 1, 2017 --- --- VT Vantagepoint Growth & Income Fund Large Blend 1.32% 0.00% 1.32% ------ --- VT Oppenheimer Main Street Fund Large Blend 1.24% 0.00% 1.24% VT Vantagepoint Growth Fund 11 Large Growth 1.35% 0.00% 1.35% ------ --- VT ContraFund® 10,11 Large Growth 1.23% 0.00% 1.23% ------ --- VT Wells Fargo Advantage Premier Large Company Growth 11 Large Growth 1.60% 0.05% 1.55% November 30, 2017 30 days, >$5,000 VT T. Rowe Price® Growth Stock Fund 11,12 Large Growth 1.47% 0.00% 1.47% ------ 30 days, any $ VT Vantagepoint Select Value Fund 11,13 Mid-Cap Value 1.52% 0.00% 1.52% ------ --- VT Gold. Sachs Mid Cap Value Fund 11,13 Mid-Cap Value 1.46% 0.00% 1.46% ------ --- VT Vantagepoint Aggressive Opportunities Fund 11,13 Mid-Cap Growth 1.34% 0.00% 1.34% ------ --- VT AMG TimesSquare Mid Cap Growth Fund 11,13 Mid-Cap Growth 1.79% 0.00% 1.79% ------ --- VT Harbor Mid Cap Growth Fund 11,13 Mid-Cap Growth 1.67% 0.00% 1.67% ------ --- VT Vantagepoint Mid /Small Co Inx Fund 13 Small Blend 1.00% 0.05% 0.95% April 30, 2017 --- --- VT Vantagepoint Discovery Fund 14 Small Blend 1.37% 0.00% 1.37% ------ --- VT Oppenheimer Discovery Fund 11,14 Small Growth 1.42% 0.00% 1.42% ---1%, 180 days --- Page 1 of 6 VantageTrust Funds Fund Fee Disclosure Data as of March 31, 2017 Fund Name Asset Category1 Gross Expense Waiver Net Expense Waiver Expiration Date Redemption Fee2 Trading Restriction3 International/Global Stock Funds VT Vantagepoint Overseas Index Fund 15 Foreign Large Blend 1.06% 0.05% 1.01% April 30, 2017 --- 91 days, any $ VT Vantagepoint International Fund 15 Foreign Large Blend 1.51% 0.00% 1.51% ------ 91 days, any $ VT Diversified Int'l Fund 15 Foreign Large Blend 1.60% 0.00% 1.60% ---1%, 30 days --- VT Harbor International Fund 15 Foreign Large Blend 1.60% 0.01% 1.59% February 28, 2018 2%, 60 days --- Specialty VT Nuveen Real Estate Secs Fund 16 Real Estate 1.60% 0.00% 1.60% ------ --- Please read Making Sound Investment Decisions: A Retirement Investment Guide and the accompanying VantageTrust Fund Fees and Expenses document ("Guide") carefully for a complete summary of all fees, expenses, investment objectives and strategies, and risks before investing. For a current Guide, contact ICMA-RC by calling 800-669-7400 or log into your account at www.icmarc.org. VantageTrust Funds invest either in collective investment funds or underlying registered funds. Please refer to the underlying fund's disclosure documents for additional information on fund fees and expenses. ICMA-RC's identified fund line-up is a committment to administer these funds for the plan, not advice to the plan sponsor on the composition of the plan's fund line-up. ICMA-RC provides plan sponsors fund information to assist them in meeting their fiduciary responsibility in managing the plan. The plan sponsor retains the obligation to prudently select and monitor the investment funds it offers to plan participants. ICMA-RC may adjust fees commensurate with changes in revenue from alternative funds selected by the plan sponsor from ICMA-RC's mutual fund platform. Fund expenses are subject to change. 1 Morningstar places funds in certain categories based on the fund's historical portfolio holdings. Placement of a fund in a particular Morningstar category does not mean that the fund will remain in that category or that it will invest primarily in securities consistent with its Morningstar category. A fund's investment strategy and portfolio holdings are governed by its prospectus, guidelines or other governing documents, not its Morningstar category. The source for this information is Morningstar, Inc. Copyright © 2017 Morningstar, Inc.® All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar, Inc. is a global investment research firm that is not affiliated with ICMA-RC. ICMA-RC does not independently verify Morningstar data. 4 Direct transfers from a stable value fund to competing funds are restricted. Competing funds may include, but are not limited to money market mutual funds, certificates of deposit, stable value funds, investment options that offer guarantees of principal or income, certain short-term bond funds and self-directed brokerage accounts. Certain restrictions may apply when you want to transfer money from a stable value fund to a competing fund. These restrictions generally include waiting periods before transfers can be made back into a stable value fund. 5 The Fund is invested in a single registered mutual fund, the Fidelity Money Market Government Portfolio. Investments in the fund are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. It is possible to lose money by investing in the fund. The 7-Day Yield more closely reflects the Fund's current earnings than the quotation of total return. 6 A fixed income fund is subject to credit risk and interest rate risk. Credit risk is when an issuer of a fixed income security may be unable or unwilling to make payments of principal or interest to the holders of these securities or may declare bankruptcy. Fixed income securities fluctuate in value as interest rates change. When interest rates rise, the market prices of fixed income securities will usually decrease; when interest rates fall, the market prices of fixed income securities usually will increase. 7 Funds that invest primarily in high yield bonds (bonds that are rated below investment grade and also known as "junk bonds") are subject to additional risk as these high yield bonds are considered speculative and involve a greater risk of default than "investment grade" securities. The values of these securities are particularly sensitive to changes in interest rates, issuer creditworthiness, and economic and political conditions. The market prices of these securities may decline significantly in periods of general economic difficulty, may be harder to value, and may be less liquid than higher rated securities. 2 Certain funds or underlying funds may charge a redemption fee. Current information about redemption fee, if any, will be contained in the fund's or underlying fund's prospectus. You may contact us to obtain a prospectus or to answer questions by calling 800-669-7400, emailing investorservices@icmarc.org, or visiting www.icmarc.org.fund's prospectus. You may contact us to obtain a prospectus or to answer questions by calling 800-669-7400, emailing investorservices@icmarc.org, or visiting www.icmarc.org. 3 Frequent trading rules are designed to detect and discourage trading activities that may increase costs to all investors. All funds or underlying funds are monitored for frequent trading. Certain funds or underlying funds may impose fees or restrictions to deter frequent trading. Current information about these fees or restrictions can be found in a fund's or underlying fund's prospectus. You may contact us to obtain a prospectus or to answer questions by calling 800-669-7400, emailing investorservices@icmarc.org, or visiting www.icmarc.org. You can obtain information about ICMA-RC's Frequent Trading Policy at www.icmarc.org/frequenttrading. Page 2 of 6 VantageTrust Funds Fund Fee Disclosure Data as of March 31, 2017 9 The Fund is not a complete solution for all of your retirement savings needs. An investment in the Fund includes the risk of loss, including near, at or after the target date of the Fund. There is no guarantee that the Fund will provide adequate income at and through an investor's retirement. Selecting the Fund does not guarantee that you will have adequate savings for retirement. 8 Prudential Retirement Insurance and Annuity Company (Prudential), CA COA #08003, Hartford, CT. Neither Prudential nor ICMA-RC guarantees the investment performance or return on contributions to Prudential's Separate Account. You should carefully consider the objectives, risks, charges, expenses and underlying guarantee features before purchasing this product. Prudential may increase the Guarantee Fee in the future, from 1.00% up to a maximum of 1.50%. Like all variable investments, this Fund may lose value. Availability and terms may vary by jurisdiction; subject to regulatory approvals. Annuity contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Guarantees are based on Prudential's claims-paying ability. This annuity is issued under Contract form # GA-2020-TGWB4-0805-RC. ICMA-RC provides recordkeeping services to your Plan and is the investment manager of the underlying Prudential separate account. Prudential or its affiliates may compensate ICMA-RC for providing these and related administrative services in connection with the Fund. Variable annuities are suitable for long-term investing, particularly retirement savings. ©2017 Prudential, the Prudential logo, and the Rock symbol and Bring Your Challenges are service marks of the Prudential Insurance Company of America, Newark, NJ, and its related entities, registered in many jurisdictions worldwide. Note: Participants who are interested in the VT Retirement IncomeAdvantage Fund must first receive and read the VT Retirement IncomeAdvantage Fund Important Considerations document, before investing. 16 Sector funds tend to be riskier and more volatile than the broad market because they are generally less diversified and more volatile than other mutual funds. 15 Funds that invest in foreign securities are exposed to the risk of loss due to political, economic, legal, regulatory, and operational uncertainties; differing accounting and financial reporting standards; limited availability of information; currency fluctuations; and higher transaction costs. Investments in foreign currencies or securities denominated in foreign currencies (including derivative instruments that provide exposure to foreign currencies) may experience gains or losses solely based on changes in the exchange rate between foreign currencies and the U.S. dollar. The risk of investing in foreign securities may be greater with respect to securities of companies located in emerging market countries. The value of developing or emerging market currencies may fluctuate more than the currencies of companies with more mature markets. 12 T. Rowe Price is a registered trademark of T. Rowe Price Group, Inc. – all rights reserved. 13 Funds that invest primarily in mid-capitalization companies involve greater risk than is customarily associated with investments in larger, more established companies. Equity securities of mid- capitalization companies generally trade in lower volume and are generally subject to greater and less predictable price changes than the securities of larger companies. 10 PURITAN and CONTRAFUND are registered service marks of FMR LLC. Used with permission. 11 Certain funds may be subject to style risk, which is the possibility that the investment style of its investment adviser will trail the returns of the overall market. In the past, different types of securities have experienced cycles of outperformance and underperformance in comparison to the market in general. For example, growth stocks have performed best during the later stages of economic expansion and value stocks have performed best during periods of economic recovery. Both styles may go in and out of favor. When the investing style used by a fund is out of favor, that fund is likely to underperform other funds that use investing styles that are in favor. 14 Funds that invest primarily in small-capitalization companies involve greater risk than is customarily associated with investments in larger, more established companies. Equity securities of small-capitalization companies are generally subject to greater price volatility than those of larger companies due to less certain growth prospects, the lower degree of liquidity in the markets for their securities, and the greater sensitivity of smaller companies to changing economic conditions. Also, small-capitalization companies may have more limited product lines, fewer capital resources and less experienced management than larger companies. Page 3 of 6 VantageTrust Funds Fund Revenue Disclosure Data as of March 31, 2017 Fund Name Asset Category 1 Recordkeeping Revenue 2 ICMA-RC Investment Management Revenue Total ICMA-RC Revenue 2 Stable Value/Cash Management VantageTrust PLUS Fund Stable Value 0.80% 0.30% 1.10% VantageTrust Cash Management Fund 3 Money Market 0.80% 0.00% 0.80% Bond Funds VT Vantagepoint Inflation Focus Fund 4 Inflation-Protected Bond 0.80% 0.20% 1.00% VT Vantagepoint Core Bond Index Fund 4 Intermediate-Term Bond 0.80% 0.10% 0.90% VT Western Assets Core Plus Bond Fund 4 Intermediate-Term Bond 0.90% 0.00% 0.90% VT PIMCO High Yield Fund 5 High Yield Bond 0.80% 0.00% 0.80% Guaranteed Lifetime Income Funds VT Retirement IncomeAdvantage Fund 6 N/A 1.00% 0.05% 1.05% Asset Allocation/Balanced Funds VT Vantagepoint Milestone Retirement Income Fund 7 Target-Date Retirement 0.80% 0.28% 1.08% VT Vantagepoint Milestone 2010 Fund 7 Target-Date 2000-2010 0.80% 0.28% 1.08% VT Vantagepoint Milestone 2015 Fund 7 Target-Date 2015 0.80% 0.28% 1.08% VT Vantagepoint Milestone 2020 Fund 7 Target-Date 2020 0.80% 0.28% 1.08% VT Vantagepoint Milestone 2025 Fund 7 Target-Date 2025 0.80% 0.28% 1.08% VT Vantagepoint Milestone 2030 Fund 7 Target-Date 2030 0.80% 0.28% 1.08% VT Vantagepoint Milestone 2035 Fund 7 Target-Date 2035 0.80% 0.28% 1.08% VT Vantagepoint Milestone 2040 Fund 7 Target-Date 2040 0.80% 0.28% 1.08% VT Vantagepoint Milestone 2045 Fund 7 Target-Date 2045 0.80% 0.28% 1.08% VT Vantagepoint Milestone 2050 Fund 7 Target-Date 2050 0.80% 0.29% 1.09% VT Vantagepoint Milestone 2055 Fund 7 Target-Date 2055 0.80% 0.29% 1.09% VT Vantagepoint Model Port Conser Growth Fund Allocation--30% to 50% Equity 0.80% 0.29% 1.09% VT Vantagepoint Model Port Tradit Growth Fund Allocation--50% to 70% Equity 0.80% 0.28% 1.08% VT Vantagepoint Model Port Long-Term Growth Fund Allocation--70% to 85% Equity 0.80% 0.28% 1.08% VT Vantagepoint Model Port All-Eqty Growth Fund 13 World Stock 0.80% 0.28% 1.08% VT Puritan® Fund 8 Allocation--50% to 70% Equity 0.80% 0.00% 0.80% U.S. Stock Funds VT Vantagepoint Equity Income Fund 9 Large Value 0.80% 0.20% 1.00% VT Invesco Diversified Dividend Fund 9 Large Value 0.80% 0.00% 0.80% VT AllianzGI NFJ Dividend Value Fund 9 Large Value 0.90% 0.00% 0.90% VT Vantagepoint 500 Stock Index Fund Large Blend 0.80% 0.10% 0.90% VT Vantagepoint Broad Market Index Fund Large Blend 0.80% 0.10% 0.90% VT Vantagepoint Growth & Income Fund Large Blend 0.80% 0.20% 1.00% VT Parnassus Core Equity Fund Large Blend 0.80% 0.00% 0.80% VT Oppenheimer Main Street Fund Large Blend 0.80% 0.00% 0.80% VT Vantagepoint Growth Fund 9 Large Growth 0.80% 0.20% 1.00% VT Wells Fargo Advantage Premier Large Company Growth 9 Large Growth 1.05% 0.00% 1.05% VT T. Rowe Price® Growth Stock Fund 9,10 Large Growth 0.95% 0.00% 0.95% VT ContraFund ® 8,9 Large Growth 0.80% 0.00% 0.80% VT Vantagepoint Select Value Fund 9,11 Mid-Cap Value 0.80% 0.20% 1.00% VT Gold. Sachs Mid Cap Value Fund 9,11 Mid-Cap Value 0.80% 0.00% 0.80% VT Vantagepoint Aggressive Opportunities Fund 9,11 Mid-Cap Growth 0.80% 0.20% 1.00% VT AMG TimesSquare Mid Cap Growth Fund 9,11 Mid-Cap Growth 0.90% 0.00% 0.90% VT Harbor Mid Cap Growth Fund 9,11 Mid-Cap Growth 0.80% 0.00% 0.80% Page 4 of 6 VantageTrust Funds Fund Revenue Disclosure Data as of March 31, 2017 Fund Name Asset Category 1 Recordkeeping Revenue 2 ICMA-RC Investment Management Revenue Total ICMA-RC Revenue 2 VT Vantagepoint Mid /Small Co Inx Fund 11 Small Blend 0.80% 0.10% 0.90% VT Vantagepoint Discovery Fund 12 Small Blend 0.80% 0.20% 1.00% VT Oppenheimer Discovery 9,12 Small Growth 0.80% 0.00% 0.80% International/Global Stock Funds VT Vantagepoint Overseas Index Fund 13 Foreign Large Blend 0.80% 0.10% 0.90% VT Vantagepoint International Fund 13 Foreign Large Blend 0.80% 0.20% 1.00% VT Diversified Int'l Fund 13 Foreign Large Blend 0.80% 0.00% 0.80% VT Harbor International Fund 13 Foreign Large Blend 0.80% 0.00% 0.80% Specialty Funds VT Nuveen Real Estate Secs Fund 14 Real Estate 0.80% 0.00% 0.80% 5 Funds that invest primarily in high yield bonds (bonds that are rated below investment grade and also known as "junk bonds") are subject to additional risk as these high yield bonds are considered speculative and involve a greater risk of default than "investment grade" securities. The values of these securities are particularly sensitive to changes in interest rates, issuer creditworthiness, and economic and political conditions. The market prices of these securities may decline significantly in periods of general economic difficulty, may be harder to value, and may be less liquid than higher rated securities. 3 The Fund is invested in a single registered mutual fund, the Fidelity Money Market Government Portfolio. Investments in the fund are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. It is possible to lose money by investing in the fund. The 7- Day Yield more closely reflects the Fund's current earnings than the quotation of total return. Please read Making Sound Investment Decisions: A Retirement Investment Guide and the accompanying VantageTrust Fund Fees and Expenses document ("Guide") carefully for a complete summary of all fees, expenses, investment objectives and strategies, and risks before investing. For a current Guide, contact ICMA-RC by calling 800-669-7400 or log into your account at www.icmarc.org. VantageTrust Funds invest either in collective investment funds or underlying registered funds. Please refer to the underlying fund's disclosure documents for additional information on fund fees and expenses. ICMA-RC's identified fund line-up is a committment to administer these funds for the plan, not advice to the plan sponsor on the composition of the plan's fund line-up. ICMA-RC provides plan sponsors fund information to assist them in meeting their fiduciary responsibility in managing the plan. The plan sponsor retains the obligation to prudently select and monitor the investment funds it offers to plan participants. ICMA-RC may adjust fees commensurate with changes in revenue from alternative funds selected by the plan sponsor from ICMA-RC's mutual fund platform. Fund expenses are subject to change. 1 Morningstar places funds in certain categories based on the fund's historical portfolio holdings. Placement of a fund in a particular Morningstar category does not mean that the fund will remain in that category or that it will invest primarily in securities consistent with its Morningstar category. A fund's investment strategy and portfolio holdings are governed by its prospectus, guidelines or other governing documents, not its Morningstar category. The source for this information is Morningstar, Inc. Copyright © 2017 Morningstar, Inc.® All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar, Inc. is a global investment research firm that is not affiliated with ICMA-RC. ICMA-RC does not independently verify Morningstar data. 2 ICMA-RC or its affiliates receive payments from third-party mutual funds that underlie certain VantageTrust Funds that may be available for investment through your plan. These payments are for services rendered by ICMA-RC or its affiliates to plans and participants, and are in the form of 12b-1 fees, service fees, compensation for sub-accounting and other services provided by ICMA-RC or its affiliates. The revenue amounts listed for VT Vantagepoint Funds and the VT PLUS Fund include all compensation paid by the fund to ICMA-RC and/or its affiliates. This amount includes compensation for investment advisory, transfer agency, and plan/participant services that is included in the daily NAV calculation. Revenue is subject to change at the discretion of the fund company and is received at various times throughout the course of a year based on the policies of the individual fund companies. 4 A fixed income fund is subject to credit risk and interest rate risk. Credit risk is when an issuer of a fixed income security may be unable or unwilling to make payments of principal or interest to the holders of these securities or may declare bankruptcy. Fixed income securities fluctuate in value as interest rates change. When interest rates rise, the market prices of fixed income securities will usually decrease; when interest rates fall, the market prices of fixed income securities usually will increase. Page 5 of 6 VantageTrust Funds Fund Revenue Disclosure Data as of March 31, 2017 13 Funds that invest in foreign securities are exposed to the risk of loss due to political, economic, legal, regulatory, and operational uncertainties; differing accounting and financial reporting standards; limited availability of information; currency fluctuations; and higher transaction costs. Investments in foreign currencies or securities denominated in foreign currencies (including derivative instruments that provide exposure to foreign currencies) may experience gains or losses solely based on changes in the exchange rate between foreign currencies and the U.S. dollar. The risk of investing in foreign securities may be greater with respect to securities of companies located in emerging market countries. The value of developing or emerging market currencies may fluctuate more than the currencies of companies with more mature markets. 14 Sector funds tend to be riskier and more volatile than the broad market because they are generally less diversified and more volatile than other mutual 10 T. Rowe Price is a registered trademark of T. Rowe Price Group, Inc. – all rights reserved. 11 Funds that invest primarily in mid-capitalization companies involve greater risk than is customarily associated with investments in larger, more established companies. Equity securities of mid-capitalization companies generally trade in lower volume and are generally subject to greater and less predictable price changes than the securities of larger companies. 7 The fund is not a complete solution for all of your retirement savings needs. An investment in the fund includes the risk of loss, including near, at or after the target date of the fund. There is no guarantee that the fund will provide adequate income at and through an investor's retirement. Selecting the fund does not guarantee that you will have adequate savings for retirement. 9 Certain funds may be subject to style risk, which is the possibility that the investment style of its investment adviser will trail the returns of the overall market. In the past, different types of securities have experienced cycles of outperformance and underperformance in comparison to the market in general. For example, growth stocks have performed best during the later stages of economic expansion and value stocks have performed best during periods of economic recovery. Both styles may go in and out of favor. When the investing style used by a fund is out of favor, that fund is likely to underperform other funds that use investing styles that are in favor. 12 Funds that invest primarily in small-capitalization companies involve greater risk than is customarily associated with investments in larger, more established companies. Equity securities of small-capitalization companies are generally subject to greater price volatility than those of larger companies due to less certain growth prospects, the lower degree of liquidity in the markets for their securities, and the greater sensitivity of smaller companies to changing economic conditions. Also, small-capitalization companies may have more limited product lines, fewer capital resources and less experienced management than larger companies. 6 Prudential Retirement Insurance and Annuity Company (Prudential), CA COA #08003 , Hartford, CT. Neither Prudential nor ICMA-RC guarantees the investment performance or return on contributions to Prudential's Separate Account. You should carefully consider the objectives, risks, charges, expenses and underlying guarantee features before purchasing this product. Prudential may increase the Guarantee Fee in the future, from 1.00% up to a maximum of 1.50%. Like all variable investments, this Fund may lose value. Availability and terms may vary by jurisdiction; subject to regulatory approvals. Annuity contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Guarantees are based on Prudential's claims-paying ability. This annuity is issued under Contract form # GA-2020-TGWB4-0805-RC. ICMA-RC provides recordkeeping services to your Plan and is the investment manager of the underlying Prudential separate account. Prudential or its affiliates may compensate ICMA-RC for providing these and related administrative services in connection with the Fund. Variable annuities are suitable for long-term investing, particularly retirement savings. ©2017 Prudential, the Prudential logo, and the Rock symbol and Bring Your Challenges are service marks of the Prudential Insurance Company of America, Newark, NJ, and its related entities, registered in many jurisdictions worldwide. Note: Participants who are interested in the VT Retirement IncomeAdvantage Fund must first receive and read the VT Retirement IncomeAdvantage Fund Important Considerations document, before investing. 8 PURITAN and CONTRAFUND are registered service marks of FMR LLC. Used with permission. Page 6 of 6 Item No. 8. C ity C ouncil Agenda S taf f R eport Meeting Date: 6/27/2017 AG E ND A IT E M : B riefing/Discussion regarding the 2016 C onsumer C onfidence Report. (J oseph J ohnson) S UM M ARY: Staf f will provide a briefing on the 2016 Consumer Conf idence report f or the water system. S TAF F RE C O M M E ND AT IO N: Brief ing/Discussion item only. No Council action is required. AT TAC HM E NT S: D escription Upload D ate Type 2016 Consumer C onfidence R eport 6/20/2017 Exhibit The City of Anna is pleased to share this water quality report with you. It describes to you, our customer, the quality of your drinking water. The City of Anna meets or exceeds Texas Com- mission on Environmental Quality (TCEQ) and United States Environmental Protection Agen- cy (US EPA) regulations for drinking water. PWS ID Number: TX0430027 En Español Este reporte incluye información importante sobre el agua para tomar. Para asistencia en español, favor de llamar al telefono (972) 924-4510 You may be more vul- nerable than the gen- eral population to cer- tain microbial contam- inants, such as Cryptosporidium, in drink- ing water. Infants, some elderly, or immun- ocompromised persons such as those un- dergoing chemotherapy for cancer; persons who have undergone organ transplants; those who are undergoing treatment with steroids; and people with HIV/AIDS or oth- er immune system disorders, can be partic- ularly at risk from infections. You should seek advice about drinking water from your physician or health care providers Addi- tional guidelines on appropriate means to lessen the risk of infection by Cryptosporid- ium are available from the Safe Drinking Water Hotline (800-426-4791). If present, elevated levels of lead can cause serious health problems, especially for preg- nant women and young children. Lead in drinking water is primarily from materials and components associated with service lines and home plumbing. We are responsi- ble for providing high quality drinking wa- ter, but we cannot control the variety of ma- terials used in plumbing components. When your water has been sitting for several hours, you can minimize the potential for lead exposure by flushing your tap for 30 seconds to 2 minutes before using water for drinking or cooking. If you are concerned about lead in your water, you may wish to have your water tested. Information on lead in drinking water, testing methods, and steps you can take to minimize exposure is availa- ble from the Safe Drinking Water Hotline or at http://www.epa.gov/safewater/lead. Sources of Drinking Water The sources of drinking water (both tap water and bottled water) include rivers, lakes, streams, ponds, reservoirs, springs, and wells. As water travels over the surface of the land or through the ground, it dissolves naturally-occurring minerals and, in some cases, radioactive material, and can pick up substances resulting from the presence of animals or from human activity. Drinking water, including bottled water, may reasonably be expected to contain at least small amounts of some contaminants. The presence of contaminants does not nec- essarily indicate that water poses a health risk. More information about contaminants and potential health effects can be ob tained by calling the EPAs Safe Drinking Water Hotline at (800) 426-4791. The City of Anna gets its water from a combination of ground (90%) and surface (10%) water sources. The ground water comes fr om seven deep water wells owned and operated by the City of Anna. The treated surface water is purchased from Greater Texoma Utility Authority (GTUA) through a j oint agreement with North Texas Municipal Water District (NTMWD). The NTMWD relies on surface water from Lavon Lake, Lake Texoma, Lake Tawakoni and Jim Chapman Lake (C ooper Lake). Your water is treat- ed through sedimentation, filtrate ion, and disinfection to reduce or remove harmful contaminants that may be present in your drinking water. Contaminants Contaminants that may be present in source water include: - Microbial contaminants, such as viruses and bacteria, which may come from sewage treatment plants, septic systems, agricultu ral livestock operations, and wildlife. - Inorganic contaminants, such as salts and metals, which can be naturally-occurring or result from urban storm water runoff, industrial or domestic wastewater discharges, oil and gas production, mining, or farming. - Pesticides and herbicides, which may come from a variety of sources such as agriculture, urban storm water runoff, and resid ential uses. - Organic chemical contaminants, including synthetic and volatile organic chemicals, which are by-products of industrial processes and petroleum production, and can also come from gas stations, urban storm water runoff, and septic systems. - Radioactive contaminants, which can be naturally-occurring or be the result of oil and gas production and mining activities. In order to ensure that tap water is safe to drink, EPA prescribes regulations which limit the amount of certain contaminants in water provided by public water systems. FDA regulations establish limits for contaminants in bottled water which must provide the same protection for public health. Contaminants may be found in drinking water that may cause taste, color, or odor problems. These types of problems are not n ecessarily causes for health concerns. For more information on taste, odor, or color of drinking water, please contact Joseph Johnson at (972) 924 -4510. Information about Source Water Assessments The TCEQ completed an assessment of your source water and results indicate that some of your sources are susceptible to certa in contaminants. The sampling require- ments for your water system are based on this susceptibility and previous sample data. Any detections of these contaminants may be found in this Consumer Confidence Report. For more information on source water assessments and protection efforts at our system, contact Joseph Johnson at (97 2) 924-4510. For more information about your sources of water, please refer to the Source Water Assessment Viewer available at the followi ng URL: http://www.tceq.texas.gov/gis/swaview For further details about sources and source-water assessments are available in Drinking Water Watch at the following URL: http://dww2.tceq.texas.gov/DWW/ City Council Meetings Location: City Hall Administration Building 111 N. Powell Parkway Anna, Texas 75409 Date: Second and fourth Tuesday of each month. Time: 7:30 PM For more information regarding this report contact: Joseph Johnson, Director of Public Works at (972) 924- 4510 An Annual Insight into Drinking Water Quality Visit: www.annatexas.gov                                Lead and Copper Definitions: Action Level Goal (ALG): The level of a contaminant in drinking water below which there is no known or expected risk to heal th. ALGs allow for a margin of safety. Action Level: The concentration of a contaminant which, if exceeded, triggers treatment or other requirements which a water system must follow.             Violation (Y/N)           N                                                                                                                          The system is in compliance with the maximum residual disinfectant level if the running annual average of all samples taken in the distribution system is less than 4.0 mg/l. The system is in compliance with the minimum residual disinfectant level if less than 5% of the monthly samples were under the minimum level. *EPA considers 50 pCi/L to be the level of concern for beta particles. NITRATE ADVISORY: Nitrate in drinking water at levels above 10 ppm is a health risk for infants of less than six months of a ge. High nitrate levels in drinking water can cause blue baby syndrome. Nitrate levels may rise quickly for short periods of time because of rainfall or agricultural activity. I f you are caring for an infant you should ask advice from your healthcare provider. Regulated Contaminants Disinfectants and Disinfection By-Products Collec- tion Date Highest Level Detected Range of Levels Detected MCLG MCL Units Violation Likely Source of Contamination Bromate 2015 8.9 0.0 - 8.9 5 10 ppb No By-product of drinking water ozonation. NOTE: Not all sample results may have been used for calculating the Highest Level Detected because some results may be part of an e val uation to determine where compliance sampling should occur in the future. Inorganic Contaminants Collec- tion Date Highest Level Detected Range of Levels Detected MCLG MCL Units Violation Likely Source of Contamination Antimony 2016 Levels lower than detect level 0-0 6 6 ppb No Discharge from petroleum refineries; fire retardants; ceramics; electronics; solder; and test addition. Arsenic 2016 0.9 0.0-0.9 0 10 ppb No Erosion of natural deposits; runoff from orchards; runoff from glass and electronics production wastes. Barium 2016 0.061 0.042-0.061 2 2 ppm No Discharge of drilling wastes; discharge from metal refineries; erosion of natural deposits. Beryllium 2016 Levels lower than detect level 0 - 0 4 4 ppb No Discharge from metal refineries and coal-burning factories; discharge from electrical, aerospace, and de- fense industries. Cadmium 2016 Levels lower than detect level 0 - 0 5 5 ppb No Corrosion of galvanized pipes; erosion of natural deposits; discharge from metal refineries; runoff from waste batteries and paints. Chromium 2016 1.2 0.52 - 1.20 100 100 ppb No Discharge from steel and pulp mills; erosion of natural deposits. Fluoride 2016 0.93 0.13 - 0.93 4 4 ppm No Erosion of natural deposits; water additive which promotes strong teeth; discharge from fertilizer and alumi- num factories. Mercury 2016 Levels lower than detect level 0 - 0 2 2 ppb No Erosion of natural deposits; discharge from refineries and factories; runoff from landfills; runoff from cropland. Nitrate (measured as Ni- trogen) 2016 0.79 0.05 - 0.79 10 10 ppm No Runoff from fertilizer use; leaching from septic tanks; sewage; erosion of natural deposits. Selenium 2016 3.4 1.4 - 3.4 50 50 ppb No Discharge from petroleum and metal refineries; erosion of natural deposits; discharge from mines. Thallium 2016 Levels lower than detect level 0 - 0 0.5 2 ppb No Discharge from electronics, glass, and leaching from ore-processing sites; drug factories. NITRATE ADVISORY: Nitrate in drinking water at levels above 10 ppm is a health risk for infants of less than six months of age. High nitrate le vels in drinking water can cause blue baby syndrome. Nitrate levels may rise quickly for short periods of time because of rainfall or agricultural activity. If you are caring for an infant you should ask advice from your healthcare provider. Radioactive Contaminants Collec- tion Date Highest Level Detected Range of Levels Detected MCLG MCL Units Violation Likely Source of Contamination Beta/photon emitters 5/2/16 5.6 5.6 - 5.6 0 50 pCi/L* No Decay of natural and man-made deposits. Gross alpha excluding radon and uranium 5/2/16 Levels lower than detect level 0 - 0 0 15 pCi/L No Erosion of natural deposits. Radium 5/2/16 Levels lower than detect level 0—0 0 5 pCi/L No Erosion of natural deposits. *EPA considers 50 pCi/L to be the level of concern for beta particles. Heptachlor 2016 Levels lower than detect level 0 - 0 0 400 ppt No Residue of banned termiticide. Heptachlor epoxide 2016 Levels lower than detect level 0 - 0 0 200 ppt No Breakdown of heptachlor. Hexachlorobenzene 2016 Levels lower than detect level 0 - 0 0 1 ppb No Discharge from metal refineries and agricultural chemical factories. Hexachlorocyclopentadiene 2016 Levels lower than detect level 0 - 0 50 50 ppb No Discharge from chemical factories. Lindane 2016 Levels lower than detect level 0 - 0 200 200 ppt No Runoff / leaching from insecticide used on cattle, lumber, and gardens. Methoxychlor 2016 Levels lower than detect level 0 - 0 40 40 ppb No Runoff / leaching from insecticide used on fruits, vegetables, alfalfa, and livestock. Oxamyl [Vydate] 2016 Levels lower than detect level 0 - 0 200 200 ppb No Runoff / leaching from insecticide used on apples, potatoes, and tomatoes. Pentachlorophenol 2016 Levels lower than detect level 0 - 0 0 1 ppb No Discharge from wood preserving factories. Simazine 2016 Levels lower than detect level 0 - 0 4 4 ppb No Herbicide runoff. Toxaphene 2016 Levels lower than detect level 0 - 0 0 3 ppb No Runoff / leaching from insecticide used on cotton and cattle. Synthetic organic contami- nants including pesticides and herbicides Collec- tion Date Highest Level Detected Range of Lev- els Detected MCLG MCL Units Violation Likely Source of Contamination 2, 4, 5 - TP (Silvex) 2016 Levels lower than detect level 0 - 0 50 50 ppb No Residue of banned herbicide. 2, 4 - D 2016 Levels lower than detect level 0 - 0 70 70 ppb No Runoff from herbicide used on row crops. Alachlor 2016 Levels lower than detect level 0 - 0 0 2 ppb No Runoff from herbicide used on row crops. Atrazine 2016 0.61 0.31 - 0.61 3 3 ppb No Runoff from herbicide used on row crops. Benzo (a) pyrene 2016 Levels lower than detect level 0 - 0 0 200 ppt No Leaching from linings of water storage tanks and distribution lines. Carbofuran 2016 Levels lower than detect level 0 - 0 40 40 ppb No Leaching of soil fumigant used on rice and alfalfa. Chlordane 2016 Levels lower than detect level 0 - 0 0 2 ppb No Residue of banned termiticide. Dalapon 2016 Levels lower than detect level 0 - 0 200 200 ppb No Runoff from herbicide used on rights of way. Di (2-ethylhexyl) adipate 2016 Levels lower than detect level 0 - 0 400 400 ppb No Discharge from chemical factories. Di (2-ethylhexyl) phthalate 2016 Levels lower than detect level 0.0 - 0.0 0 6 ppb No Discharge from rubber and chemical factories. Dibromochloropropane (DBCP) 2016 Levels lower than detect level 0 - 0 0 0 ppt No Runoff / leaching from soil fumigant used on soybeans, cotton, pineapples, and orchards. Dinoseb 2016 Levels lower than detect level 0 - 0 7 7 ppb No Runoff from herbicide used on soybeans and vegetables. Endrin 2016 Levels lower than detect level 0 - 0 2 2 ppb No Residue of banned insecticide. Ethylene dibromide 2016 Levels lower than detect level 0 - 0 0 50 ppt No Discharge from petroleium refineries. Volatile Organic Contaminants Collection Date Highest Level Detected Range of Levels Detected MCLG MCL Units Violation Likely Source of Contamination 1, 1, 1 - Trichloroethane 2016 Levels lower than detect level 0 - 0 200 200 ppb No Discharge from metal degreasing sites and other factories. 1, 1, 2 - Trichloroethane 2016 Levels lower than detect level 0 - 0 3 5 ppb No Discharge from industrial chemical factories. 1, 1 - Dichloroethylene 2016 Levels lower than detect level 0 - 0 7 7 ppb No Discharge from industrial chemical factories. 1, 2, 4 - Trichlorobenzene 2016 Levels lower than detect level 0 - 0 70 70 ppb No Discharge from textile-finishing factories. 1, 2 - Dichloroethane 2016 Levels lower than detect level 0 - 0 0 5 ppb No Discharge from industrial chemical factories. 1, 2 - Dichloropropane 2016 Levels lower than detect level 0 - 0 0 5 ppb No Discharge from industrial chemical factories. Benzene 2016 Levels lower than detect level 0 - 0 0 5 ppb No Discharge from factories; leaching from gas storage tanks and landfills. Carbon Tetrachloride 2016 Levels lower than detect level 0 - 0 0 5 ppb No Discharge from chemical plants and other industrial activities. Chlorobenzene 2016 Levels lower than detect level 0 - 0 100 100 ppb No Discharge from chemical and agricultural chemical factories. Dichloromethane 2016 Levels lower than detect level 0 - 0 0 5 ppb No Discharge from pharmaceutical and chemical factories. Ethylbenzene 2016 Levels lower than detect level 0 - 0 0 700 ppb No Discharge from petroleum refineries. Styrene 2016 Levels lower than detect level 0 - 0 100 100 ppb No Discharge from rubber and plastic factories; leaching from landfills. Tetrachloroethylene 2016 Levels lower than detect level 0 - 0 0 5 ppb No Discharge from factories and dry cleaners. Toluene 2016 Levels lower than detect level 0 - 0 1 1 ppm No Discharge from petroleum factories. Trichloroethylene 2016 Levels lower than detect level 0 - 0 0 5 ppb No Discharge from metal degreasing sites and other factories. Vinyl Chloride 2016 Levels lower than detect level 0 - 0 0 2 ppb No Leaching from PVC piping; discharge from plastics factories. Xylenes 2016 Levels lower than detect level 0 - 0 10 10 ppm No Discharge from petroleum factories; discharge from chemical factories. cis - 1, 2 - Dichloroethylene 2016 Levels lower than detect level 0 - 0 70 70 ppb No Discharge from industrial chemical factories. o - Dichlorobenzene 2016 Levels lower than detect level 0 - 0 600 600 ppb No Discharge from industrial chemical factories. p - Dichlorobenzene 2016 Levels lower than detect level 0 - 0 75 75 ppb No Discharge from industrial chemical factories. trans - 1, 2 - Dicholoroeth- ylene 2016 Levels lower than detect level 0 - 0 100 100 ppb No Discharge from industrial chemical factories. Turbidity Note: Turbidity is a measurement of the cloudiness of the water caused by suspended particles. We monitor it because it is a good indicator of water quality and the effectiveness of our filtration. Type Limit (Treatment Technique) Level Detected Violation Likely Source of Contamination Highest Single Measurement 1 NTU 0.78 NTU No Soil runoff. Lowest monthly percentage (%) meeting limit 0.3 NTU 96.20% No Soil runoff. Total Organic Carbon Note: Total organic carbon (TOC) has no health effects. The disinfectant can combine with TOC to form disinfection by-products. Disinfection is necessary to ensure that water does not have unacceptable levels of patho- gens. By-products of disinfection include trihalomethanes (THMs) and haloacetic acids (HAA) which are reported elsewhere in this report.* Removal ratio is the percent of TOC removed by the treatment process divided by the percent of TOC re- quired by TCEQ to be removed. Collection Date Highest Level Detected Range of Levels Detected Likely Source of Contamination Unit Source Water 2016 4.23 3.14 - 4.23 Naturally present in the environment. ppm Drinking Water 2016 2.8 1.37 - 2.80 Naturally present in the environment. ppm Removal Ratio 2016 63.9% 25.7 - 63.9 % removal* N/A Cryptosporidium Contaminants Collection Date Highest Level Detected Range of Levels Detected Likely Source of Contamination Unit Cryptosporidium 2016 0 0 - 0 Human and animal fecal waste. (Oo) Cysts/L Giardia 2016 0 0 - 0 Human and animal fecal waste (Oo) Cysts/L Visit: www.annatexas.gov Some people who drink water containing trihalomethanes in excess of the MCL over many years may experience problems with their liver, kidneys, or central nervous systems, and may have an increased risk of getting cancer. As noted in this report, total trihalomethanes sampling within our system indicated that levels were well below the MCL. Reported monthly samples found no total or fecal coliform. Source: Naturally occurring in the environment.  Maximum Contaminant Level Goal Total Coliform Maximum Contaminant Level Highest No. of Positive Fecal Coliform or E. Coli Maximum Contaminant Level Total No. of Positive E. Coli or Fecal Coliform Samples Violation Likely Source of Contamination 0 1 positive monthly sample. 4 0 0 N Naturally present in the environment. Coliforms are bacteria that are naturally present in the environment and are used as an indicator that other, potentially har mful, waterborne pathogens may be present or that a poten- tial pathway exists through which contamination may enter the drinking water distribution system. We found coliforms indicati ng the need to look for potential problems in water treatment or distribution. When this occurs, we are required to conduct an assessment to identify problems and to correct any problems that were found during the assessment. During the past year we were required to conduct one Level 1 assessment. One Level 1 assessment was completed. In addition, w e were required to take two corrective actions and we completed two of these actions. The corrective actions were to adjust the sampling standard operating procedures and taking additional samples. Additional sa mples were found to be non-detectable for coliform. Item No. 9. C ity C ouncil Agenda S taf f R eport Meeting Date: 6/27/2017 AG E ND A IT E M : B riefing/Discussion regarding City Charter review and amendment process. (C ity A ttorney) S UM M ARY: T he City A ttorney will provide a brief overview of the process to review and amend the C ity C harter. S TAF F RE C O M M E ND AT IO N: Brief ing/discussion only. No Council action is required. AT TAC HM E NT S: D escription Upload D ate Type