That was the specific arrangement.
The idea was that he would be mayor, then resign from the seat because he wouldn't need it. The original plan was for him to have his own list which would get nowhere. If he had stuck with shas from the beginning, he would have had a seat in his own right.

as mayor he could have resigned from city council? doesnt the mayor have to hold a city council seat?
I know what the ntention was but they did not believe he would lose, so I dont know if they made that part of any agreement. if there was an actual agreement then he should keep it. He should anyway as hakaras hatov, even with no agreement, but with Rav Cohen instructing him to hold it, I dont see any need to give it up if there wasnt an actual agreement.

The mayor does not need a seat. He needs to be the head of a list. Abutbul made his own list, so that he could be mayor without taking one of shas' seats.

There has to have been an agreement. Even if he won, he would be taking one of their seats. They weren't giving up one of their seats for free. He could have it only until he is mayor, and then give it back!

if he doesnt need a seat, why would they need to give him one? he could have run without a party. also his party was invalidated, which is why he needed a seat from UTJ. I dont get it. either he needed a seat or he didnt. if he didnt, then why did they give him one of theirs?

A mayor needs to be the first of the list when he is running. After he is elected, he doesn't need that seat anymore. He wanted to use the position as head of his own list, even though it would have no seats. Instead, he borrowed the position as head of UTJ, with the expectation that after elected, he needed to return the seat.

according to the news, SHimon Goldberg (shlomei emunim) is now threatening that if he doesnt return the seat by tonight they will refuse to participate in any Haredi bloc

it's a hilul hashem that the haredi has separate parties for Ashkenazi and Sephardi. You don't have that with dati leumi, and you don't have thes with hiloni. Why can't they just grow up?

I just asked my friend who has taken an active roll in Israeli politics that has included but not limited to:

-Serving on Knesset committee
-Being a member of a major parties decision making comittee
-Running for Knesset

This is what he said.

A candidate for mayor can lead a list. If he wins, he must vacate the seat because a mayor can't also be on moetza. Yahav [Haifa] led his list too, but decided to retire so hi #2-#5 will get seats.

Actual law:

-If a mayor's list also gets seats, the mayor sits in the council as one of the members. For example, Nir Barkat was one of the 31 members of the Jerusalem council all these years, as one of the seats his party won.

-If a mayoral candidate loses, he can remain in the council if his party wins at least one seat. Moshe Leon's party got one seat in the last election and he stayed in the council. He can always quit and let the next guy move up.

-If a mayor wins but his party gets nothing, he gets specially appointed as an extra member of the council. Leon won nothing this time, so if he wins, the Interior Minister will appoint him 32.

So unless Abutbol made a deal, which I doubt, he has a right to stay.

So we understand why Abutbol made his own list. He wanted that extra spot.
When his list was disqualified, he needed to be the head of a list. So UTJ let him in. If he could resign from his seat without resigning from being mayor, surely UTJ would have demanded that. It makes no difference that he did not become mayor.

thank you Nachu, When he made hsi own list he said it was to get an extra seat for the Haredi city council numbers. At the time I didnt understand because his one would be likely taken from the others, if he would be successful. now it makes more sense