R5P-Fire And Police Pension Ordinance -Weithorn-COMMISSION ITEM SUMMARY
Condensed Title:
An Ordinance Amending Part I, Subpart B, Article IX, Related Special Acts, of The Miami Beach City Code Entitled "Pension System
for Disability and Retirement of Members of Police And Fire Departments; Amending Section 63 Entitled "Source of Monies for Fund;
Computation of Liability; Use and Investment of Fund"; Service Record"; And Amending Section 66 Entitled "Service and Disability
Benefits Generally"
Key Intended Outcome Supported:
Attract and maintain a workforce of excellence, control costs of payroll including salary and fringes/minimize taxes/ensure expenditure I
trends are sustainable over the long term
Item Summary/Recommendation:
First Reading
On September 30, 2013, the City Commission adopted Ordinance #2013-3817, amending provisions in the Fire and Police Pension Plan to
reflect what had been negotiated with the International Association of Firefighters (IAFF) and the Fraternal Order of Police (FOP}. Following
adoption of the ordinance, both the IAFF and FOP raised concerns regarding the definition of the Final Average Monthly Earnings (FAME)
retirement benefit for members hired prior to September 30, 2013, since they believed the ordinance should have maintained the previously
existing language, that the FAME would be based on the average of the highest three or the last three years of a member's employment. The
amended ordinance provides for the average of the highest three years and is silent on the subject of the last three years. Upon the
administration's inquiry, Buck Consultants, the actuary for the Fire and Police Pension Plan advised that its actuarial analysis did not change
the FAME calculation of the three last years for members hired prior to September 30, 2013.
It is important to note that the previous pension ordinance reflected the FAME based on the average of the two highest years or two last years
for members hired prior to July 14, 2010. Additionally, the Fire and Police Pension ordinance adopted at the September 30, 2013, City
Commission meeting based the FAME for employees hired on or after September 30, 2013, on the average of the five (5) highest or five last
years. After numerous discussions between the parties the City agreed to recommend a revision to the definition of the FAME for members
hired prior to September 30, 2013, to include both the highest three years or the last three years of employment.
On October 2013, the City was served with both a grievance and an unfair labor practice (ULP) charge in which the aggrieved party alleged
that a retirement benefit negotiated for members hired as a result of a consent decree had been unilaterally altered by the administration
eliminating IAFF members from eligibility. After consulting with the City's and the IAFF's legal counsel, the parties entered into a
Memorandum of Understanding (MOU) that made members hired under the consent decree eligible for retirement under the Rule of 70 with
no minimum age requirement. The IAFF confirmed on December 6, 2013, that the MOU was ratified by the membership with 115 voting
members in support of the MOU and 23 against.
As currently written, the pension ordinance does not permit command staff members who did not rise through the ranks to join the Fire and
Police Pension Plan, leaving the City of Miami Beach at a competitive disadvantage in the labor market. Therefore, the administration
recommends including such individuals in the plan, provided that they attain age 62 or have at least ten years of service prior to normal
retirement.
After adoption of the ordinance on September 30, 2013, the City's pension actuary, Michael Tierney, provided revised language concerning
the Budget Advisory Committee's recommended pension policies and guidelines adopted by the City Commission on July 17, 2013. Given
that the administration is recommending amending the Fire and Police Pension ordinance, these revisions are also included in the proposed
ordinance amendment. The Administration recommends approving the proposed ordinance and setting a second reading and public hearing
for the February 2014 City Commission meeting.
Financial Information:
Source of Amount
Funds: 1 FY2013/2014 N/A
D 2 FY2014/2015 N/A
3 FY2015/2016 N/A
OBPI Total N/A
Financial Impact Summary: According to the City's actuary, the changes to the ordinance will not have a financial impact on the
City and their impact statement will be provided prior to the Citv Commission meeting.
City Clerk's Office Legislative Tracking:
Sylvia Crespo-Tabak, Human Resources Director
S1 n-Offs:
Department Director Assistant City Manager
MIAMI BEACH 623
City Manager
Jimmy L. Morales
AGENDA IT EM _o-R--.s-=P ....... .---
DATE 1-fs:-14
-MIAMI BEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
MMISSION MEMORANDUM
TO: Mayor Philip Levine and Members
FROM: Jimmy L. Morales, City Manager
DATE: January 15, 2014 FIRST READING
SUBJECT: AN ORDINANCE OF THE MAYO AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, AMENDING PART I, SUBPART B, ARTICLE IX, RELATED SPECIAL
ACTS, OF THE MIAMI BEACH CITY CODE ENTITLED "PENSION SYSTEM FOR
DISABILITY AND RETIREMENT OF MEMBERS OF POLICE AND FIRE DEPARTMENTS";
IMPLEMENTING PROVISIONS OF THE 2012-2015 COLLECTIVE BARGAINING
AGREEMENTS BETWEEN THE CITY AND FIRE FIGHTERS OF MIAMI BEACH, (IAFF)
LOCAL 1510, AND MIAMI BEACH FRATERNAL ORDER OF POLICE, WILLIAM NICHOLS
LODGE NO. 8 (FOP); IMPLEMENTING RECOMMENDATIONS OF THE BUDGET
ADVISORY COMMITTEE, A MEMORANDUM OF UNDERSTANDING AND OTHER
CHANGES; AMENDING SECTION 63 ENTITLED "SOURCE OF MONIES FOR FUND;
COMPUTATION OF LIABILITY; USE AND INVESTMENT OF FUND"; SERVICE RECORD";
AND AMENDING SECTION 66 ENTITLED "SERVICE AND DISABILITY BENEFITS
GENERALLY"; PROVIDING FOR SEVERABILITY; REPEALING ALL ORDINANCES IN
CONFLICT THEREWITH; AND PROVIDING FOR AN EFFECTIVE DATE.
ADMINISTRATION RECOMMENDATION
The administration recommends approving the ordinance and setting a second reading and public
hearing at the February 2014 City Commission meeting.
BACKGROUND
On July 17, 2013, the City Commission ratified a three-year collective bargaining agreement covering the
period October 1, 2012 through September 30, 2015, between the City of Miami Beach and the
International Association of Firefighters (IAFF), subject to the IAFF membership ratifying the agreement.
On August 7, 2013, the IAFF confirmed ratification of the contract by 85 percent of the voting
membership.
On July 19, 2013, the City Commission ratified a three-year collective bargaining agreement covering the
period October 1, 2012 through September 30, 2015, between the City of Miami Beach and the Fraternal
Order of Police (FOP), subject to the FOP membership ratifying the agreement. The agreement ratified
by the City Commission included two substantive changes (which were made from the dais and
approved by a vote of 6:1) to the terms and conditions tentatively agreed to between the City and the
FOP. These changes included I i miting the pensionable earnings for off-duty services to 11 percent of the
members' salaries upon retirement, with an exception carved out for current police sergeants and
lieutenants, and implementing a voluntary fitness program on a quarterly basis available to all bargaining
unit members. Based on the changes made on the floor during the City Commission meeting, the FOP
and the City renegotiated certain provisions of the contract and on September 11, 2013, the City
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City Commission Memorandum
January 15, 2014
Fire and Police Pension-181 Reading
Page 2 of 3
Commission adopted a resolution accepting the amended 2012-2015 collective bargaining agreement
with the FOP that had previously been ratified on July 19, 2013.
The negotiated terms and conditions with both the IAFF and the FOP included significant changes to
pension benefits for current and future employees who participate in the Fire and Police Pension Plan
that will result in an estimated savings of approximately $130 million over the next thirty years. In addition
to ratifying the contracts, on September 30, 2013, the City Commission adopted Ordinance #2013-3817
implementing the agreed upon pension plan changes. In addition, the amendments to the Fire and
Police Pension Plan included a number of pension policies and guidelines for both of the City's pension
plans recommended by the Budget Advisory Committee (BAC) and adopted at the July 17, 2013, City
Commission meeting.
ANALYSIS
Following adoption of the amended Fire and Police Pension ordinance, leadership from both the IAFF
and FOP raised a concern relating to the newly adopted pension ordinance, which was ultimately
determined to be a scrivener's error, concerning a member's Final Average Monthly Earnings (FAME).
According to the unions, both IAFF And FOP had negotiated that effective September 30, 2013, the
FAME for IAFF and FOP bargaining unit employees hired prior to September 30, 2013, would be based
on the average of the three highest years or the three last years of employment; and employees hired on
or after September 30, 2013, would be based on the average of the five highest years or the last five
years of employment. However, the amended ordinance only reflected the "highest years" for employees
hired before September 30, 2013.
Upon the administration's inquiry, Buck Consultants, the actuary for the Fire and Police Pension Plan
advised that its actuarial analysis did not change the FAME calculation of the three last years for
members hired prior to September 30, 2013.
It is important to note that until the revisions approved September 30, 2013, the pension benefits for
employees hired prior to July 14, 2010, reflected the FAME to be based on the average of the two
highest years or last two years of employment. In addition, the Fire and Police Pension ordinance
adopted September 30, 2013, did provide employees hired on or after September 30, 2013, a retirement
benefit reflecting their FAME based on the average of the five highest or five last years. After numerous
discussions between the City and the IAFF and FOP Union leadership, the City agreed to recommend a
revision to the ordinance so that members hired prior to September 30, 2013, would have their FAME
calculations based on the three highest or last three years of employment, whichever is greater.
On October 2013, the City was served with both a grievance and an unfair labor practice charge (ULP) in
which the aggrieved party alleged that a retirement benefit negotiated for members hired as a result of a
consent decree had been unilaterally altered by the administration eliminating IAFF members from
eligibility. The benefit allowed members hired as a result of the consent decree to be grandfathered,
permitting them to maintain their retirement age eligibility at 4 7 and the Rule of 70, with no minimum age
requirement.
After consulting with the City's counsel and counsel for the IAFF, the parties entered into a Memorandum
of Understanding (MOU) that made members hired under the consent decree eligible for retirement
under the Rule of 70 with no minimum age requirement. Since the MOU changed terms and conditions
of employment, it was subject to ratification by the union membership. On December 6, 2013, the IAFF
confirmed that the MOU was ratified by the membership with 115 voting members in support of the MOU
and 23 against. Therefore, in conjunction with this item, the administration is presenting under separate
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City Commission Memorandum
January 15,2014
Fire and Police Pension-1st Reading
Page 3 of 3
cover a resolution ratifying the MOU. The memorandum of understanding is provided as Attachment 1.
The Fire and Police Pension Plan actuary has advised that implementing this change for members
covered by the IAFF hired as a result of the consent decree will not result in any significant impact to the
Plan, as there are only two members who qualify.
In late October 2013, the City's pension actuary, Michael Tierney provided the City with revised language
concerning the pension policies and guidelines for both of the City's pension plans and adopted by the
City Commission on July 17, 2013. Given that the administration is recommending changes to the Fire
and Police Pension Plan ordinance, the revised language for the pension policies and guidelines have
been included in the proposed ordinance amendment.
The administration is also presenting an amendment to the Miami Beach Employees' Retirement Plan
(MBERP) ordinance implementing the pension provisions ratified in the 2012-2015 agreement between
the City and the Government Supervisors Association of Florida (GSAF), Local OPEIU. The MBERP
ordinance amendment also includes the language provided by Mr. Tierney.
Finally, the definition of "employee" was amended in Ordinance 2013-3817 to include all certified police
officers and firefighters in the Fire and Police Pension Plan. Because the City may be recruiting
command staff members via an external recruitment process in the future, it is recommended that the
Fire and Police Pension plan ordinance be further amended to provide that members who are hired as
unclassified employees and continuously remain unclassified employees during their employment with
the City vest after 1 0 years of City service, and become eligible to retire upon reaching age 55 with 1 0 or
more years of City service.
CONCLUSION
The administration recommends that the City Commission approve the proposed ordinance amending
certain retirement benefits for Fire and Police Pension Plan members covered by the IAFF that are
consistent with benefits granted certain members covered by the FOP; amending the FAME for members
hired prior to September 30, 2013 to be based on the average of the three highest or three last years of
employment; amending language concerning the SAC's adopted pension policies and guidelines as
recommended by the City's pension actuary and amending the Plan provisions regarding unclassified
employees to facilitate recruitment of command staff members. The administration recommends
approving the proposed ordinance on first reading and setting the second reading and public hearing for
the February 2014 City Commission meeting.
AttaclP"t
JLM/KGB/SC-T/CMG
T:IAGENDA\2014\January\Police and Fire Pension\Fire and Police Pension 1st Reading Memo.doc
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ATTACHMENT 1
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("MOU") is entered into, by, and between the City
of Miami Beach ("City") and the International Association of Fire Fighters, Local 1510
(
4'Union").
The Parties agree that Section 66 of Part 1, Subpart B, Article IX, Related Special Acts of
the Miami Beach City Code, is amended in pertinent part to read:
Sec. 66. Service and disability benefits generally.
(a) The Board shall, upon application retire members meeting any one of the
following requirements:
* * *
(4) The sum of the member's age and Creditable Service equals at least 70 and
the member retires on or after October 1, 1998; provided, effective September 30,
2013, a member hired before July 14, 2010 must attain age 47 to be eligible for
retirement under this paragraph ( 4); and a member hired on or after July 14, 2010
must attain age 48 to be eligible for retirement under this paragraph (4); and
provided further, any member hired prior to July 14, 2010 who completes a
buyback of prior Creditable Service prior to September 30, 2013 and reaches the
maximum pension benefit of 85% of average monthly Salary prior to attaining
age 4 7, the employee contribution shall cease on the date such employee reaches
the 85% maximum pension benefit, and his/her final average monthly Salary will
be frozen on the same date. Notwithstanding the preceding sentence, any police
officer or firefighter member hired pursuant to a consent decree may retire when
the sum of the member's age and Creditable Service equals at least 70.
* * *
[INTENTIONALLY LEFT BLANK]
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TN WITNESS WHEREOF, subject to due ratification by vote of the bargaining unit
members and by vote of the City Commission, and intending to be legally bound, the Pru.ties
hereby execute this MOU.
CITY OF MIAMI BEAC INTERNATIONAL ASSOCIATION OF
FIRE FIGHT S OCA 1
President
~t-oL3
DATE I
tlho/;:.r
DATE I I
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FIRE & POLICE PENSION ORDINANCE
ORDINANCE NO. ___ _
AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, AMENDING PART I, SUBPART B,
ARTICLE IX, RELATED SPECIAL ACTS, OF THE MIAMI BEACH CITY
CODE ENTITLED "PENSION SYSTEM FOR DISABILITY AND
RETIREMENT OF MEMBERS OF POLICE AND FIRE
DEPARTMENTS"; IMPLEMENTING PROVISIONS OF THE 2012-2015
COLLECTIVE BARGAINING AGREEMENTS BETWEEN THE CITY
AND FIRE FIGHTERS OF MIAMI BEACH, (IAFF) LOCAL 1510, AND
MIAMI BEACH FRATERNAL ORDER OF POLICE, WILLIAM NICHOLS
LODGE NO. 8 (FOP); IMPLEMENTING RECOMMENDATIONS OF THE
BUDGET ADVISORY COMMITTEE, A MEMORANDUM OF
UNDERSTANDING AND OTHER CHANGES; AMENDING SECTION 63
ENTITLED "SOURCE OF MONIES FOR FUND; COMPUTATION OF
LIABILITY; USE AND INVESTMENT OF FUND"; SERVICE RECORD";
AND AMENDING SECTION 66 ENTITLED "SERVICE AND DISABILITY
BENEFITS GENERALLY"; PROVIDING FOR SEVERABILITY;
REPEALING ALL ORDINANCES IN CONFLICT THEREWITH; AND
PROVIDING FOR AN EFFECTIVE DATE.
BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF MIAMI BEACH,
FLORIDA:
* * *
Section 1. Section 63 of Part 1, Subpart B, Article IX, Related Special Acts of the Miami
Beach City Code, is amended to read:
Sec. 63.
fund.
Source of moneys for fund; computation of liability; use and investment of
* * *
(c) All computations of liability in connection with the System shall be based on tables
and rates approved by the Board. The Board shall designate an actuary for the System
who shall recommend such tables and rates for adoption by the Board. The actuary
designated by the Board, on the basis of such tables and rates, shall recommend to the
Board the amounts required to be paid into the System by the City under subsection (a)
of this section. During the three year period beginning October 1, 2013 and at least once
every three years thereafter. there shall be an experience study of the Systems' actuarial
assumptions performed by an actuary selected by the City. The actuary selected by the
City shall make recommendations for any changes in assumptions based on the results
of the experience study. In the event the Board of Trustees or plan actuary disagrees
with the recommended assumption changes. the Board or plan actuary shall present the
basis of their disagreement and justify any deviation from the recommended
assumptions to the City Commission. Effective September 30, 2013. five, ten and twentv
year projections of required pension contributions shall be included as part of any
actuarial valuation of the System, based on the actuarial assumptions for the System
contained in the valuation. The projections shall be updated to reflect the cost of any
proposed benefit enhancement before the City Commission agrees to the enhancement.
The cost of these studies shall be funded separately from the annual contribution to the
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pension plan. Effective September 30, 2013, there shall be an experience study of each
of the City's pension plans' actuarial assumptions performed by an actuary seleeted by
the City. The experience study should be conducted at least once every three years to
compare actual experience to the assumptions. The aotuary seleoted by the City shall
make recommendations for any changes in assumptions based on the results of the
experience study, and any deviations from those assumptions by tho pension boards
shall be justified to the City Commission. Effective September 30, 2013, the City shall
require 5, 10 and 20 year projections of required pension aontributions as part of the
annual actuarial valuations for each of the City's pension plans. These projections shall
be based on the current actuarial assumptions for each plan. The projections shall be
updated to reflect the cost of any proposed benefit enhancement before the City
Commission agrees to the enhancement. The oost of these studies shall be funded
separately from the annual contribution to the pension plan.
(d) There shall be a complete actuarial evaluation prepared by the plan actuary at least
every three years, and the City shall make such adjustments in its contributions as shall
be shown to be required by such actuarial evaluation. The money required to meet all
the obligations of this System over and above the personal contributions from members,
is a liability and obligation of the City. The expenses of the System shall not be
separately budgeted so long as the method is permitted by law. The City commission
shall levy annually, in the manner provided by law, upon all taxable property within the
City, such millage on the assessed valuation thereof as is necessary to produce the
amounts required to be contributed by the City to this System. Effective September 30,
2013, the City shall fund at least the normal cost of the System. net of member
contributions and state premium tax revenues. If the net City normal cost for any Plan
year exceeds the City's annual required contribution as determined in accordance with
Part VII. Chapter 112, Florida Statutes. the excess shall be held in reserve as part of the
Fund assets, designated as the pension stabilization fund. and shall be used to offset
the City's annual required contribution in any Plan year as determined by the Citv. The
pension stabilization fund shall be accounted for separately and not included as assets
of the Fund for plan valuation purposes. and shall be annually credited or debited with
gains and losses at the same rate of return as the overall net market rate of return on
Fund investments pension. If this exceeds the amount of the aotuarially determined
annual required contribution, the excess should be placed in a pension stabilization fund,
to be made available for future pension shortfalls.
* * *
Section 2. Section 66 of Part 1, Subpart B, Article IX, Related Special Acts of the Miami
Beach City Code, is amended to read:
Section 66. Service and disability benefits generally.
(a) The Board shall, upon application retire members meeting any one of the following
requirements:
( 1) The attainment of age 50.
(2) Permanent and total disability incurred in line of duty in the police or fire department,
or in the unclassified service as provided in section 70, irrespective of the number of
years of Creditable Service;.
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(3) Permanent and total disability incurred other than in the line of duty, after five years
of Creditable Service.
(4) The sum of the member's age and Creditable Service equals at least 70 and the
member retires on or after October 1, 1998; provided, effective September 30, 2013, a
member hired before July 14, 2010 must attain age 47 to be eligible for retirement under
this paragraph (4 ); and a member hired on or after July 14, 2010 must attain age 48 to
be eligible for retirement under this paragraph (4); and provided further, any member
hired prior to July 14, 2010 who completes a buyback of prior Creditable Service prior to
September 30, 2013 and reaches the maximum pension benefit of 85% of average
monthly Salary prior to attaining age 47, the employee contribution shall cease on the
date such employee reaches the 85% maximum pension benefit, and his/her final
average monthly Salary will be frozen on the same date. Notwithstanding the preceding
sentence, any pollee officer or firefighter member hired pursuant to a consent decree
may retire when the sum of the member's age and Creditable Service equals at least 70.
(5) Only for periods prior to October 1, 2000 and only in the case of a May 1993
Member, the attainment of age 55 with at least 10 years of Creditable Service.
(6) For Members hired on or after January 1, 2014 whose initial employment with the
City is in the unclassified service and who continuously remain a member of the
unclassifed service during their employment with the City, the attainment of age 55 with at
least 10 years of Creditable Service. Notwithstanding any other provision of this System,
members hired on or after January 1, 2014 whose initial employment with the City is in the
unclassified service and who continuously remain a member of the unclassifed service
during their employment with the City must attain at least 10 years of Creditable Service to
be eligible for any benefit under this System. other than a return of member contributions
with interest at the rate of three percent per annum.
(b) A member who attains eligibility for retirement under subsection (a) above on or
before September 30, 2013, other than a May 1993 Member who retires prior to October
1, 2000, shall be entitled to receive upon retirement under subsection (a), a monthly
pension payable for life equal to:
( 1) Three percent of the member's average monthly Salary for each year of the
member's first 15 years of Creditable Service, being computed as to a part of a year on a
pro rata basis to the nearest month; plus
(2) Four percent of the member's average monthly Salary for each year of the member's
Creditable Service in excess of 15 years, being computed as to a part of a year on a pro
rata basis to the nearest month.
(c) A member who does not attain eligibility for retirement under subsection (a) above
on or before September 30, 2013 shall be entitled to receive upon retirement under
subsection (a), a monthly pension payable for life equal to:
(1) Three percent of the member's average monthly Salary for each year of the
member's first 20 years of Creditable Service, being computed as to a part of a year on a
pro rata basis to the nearest month; provided in no event shall a member's benefit
multiplier for Creditable Service earned before October 1, 2013 be reduced; plus
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(2} Four percent of the member's average monthly Salary for each year of the member's
Creditable Service in excess of 20 years, being computed as to a part of a year on a pro
rata basis to the nearest month.
(d) For purposes of determining a member's benefit, the average monthly Salary of
members who attains eligibility for retirement under subsection (a} above on or before
September 30, 2015 shall be based on the average of the two highest-paid years of the
member prior to the date of retirement or termination, or the average of the last two paid
years of the member prior to the date of retirement or termination, whichever produces
the greater benefit for members employed by the City before May 19, 1993, and shall be
based on the average of the three highest paid years of the member prior to the date of
retirement or termination for May 1993 Members. Effective September 30, 2015, the
average monthly salary for members hired before July 14, 2010 who do not attain
eligibility for retirement under subsection (a) above on or before September 30, 2015,
shall be based on the greater of the average of the three highest paid years or last three
(3) years of the member prior to the date of retirement or termination. Members hired on
or after July 14, 2010 but prior to September 30, 2013, shall be based on the greater of
the average of the three highest paid years or last three {3) years of the member prior to
the date of retirement or termination. Members hired on or after September 30, 2013,
shall be based on the greater of the average of the five highest paid years or last five (5)
years of the member prior to the date of retirement or termination. For purposes of such
calculation, Salary shall be the Salary upon which the member's contribution to the
System was computed, as provided in paragraphs (1) and (2) below:
Section 3. Effective Date. This Ordinance shall take effect ten days following
adoption, except as otherwise specified herein.
PASSED AND DULY ADOPTED by the Mayor and City Commission of the City of Miami
Beach, Florida, this day of , 2014.
Philip Levine
Mayor
ATTEST:
Rafael E. Granado
City Clerk
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APPROVED /JS TO
FOit\-\ & LANGUAGE
& FOR EXECUTION
;i8/;y
Date