Bill holds city seat (9)
I believe the answer is:
posterior
'seat' is the definition.
('posterior' can be a synonym of 'seat')
'bill holds city' is the wordplay.
'bill' becomes 'poster' ('poster' can be a synonym of 'bill').
'holds' means one lot of letters goes inside another.
'city' becomes 'rio' (Rio is an example**).
'poster' going around 'rio' is 'POSTERIOR'.
(Other definitions for posterior that I've seen before include "Hindquarters" , "Behind" , "later" , "Further back; bottom" , "Backside" .)