Council Agenda Report

Transcription

1 Agenda Item # 10 Council Agenda Report SUBJECT: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RIO VISTA ADOPTING PROCEDURES FOR UNCLAIMED FUNDS MEETING DATE: November 17, 2011 RECOMMENDATION Staff recommends that the City Council of the City of Rio Vista adopt Resolution No., Adopting Procedures for Unclaimed Funds. BACKGROUND Staff has finalizing a new policy and procedure for the escheat of unclaimed property. Escheat is the legal process of lapsing or reverting ownership of unclaimed private property to the government by operation of law. The California Unclaimed Property Law (UPL) generally provides that unclaimed moneys held by private business and state government agencies escheat to the state. The UPL does not apply to money in the custody of local agencies. Escheat of unclaimed property in the possession of local agencies is governed by the local government escheat laws set forth in the Government Code. Specifically, Government Code sections through provide for unclaimed property in the City s possession to permanently escheat to the City. The FY Solano County Grand Jury finding addresses the concern that public funds belonging to the local cities may be held by State of California Controller s Office and that without the benefit of a policy requiring periodic search of the Controller s online database for such accounts, city s monies will remain unclaimed with the State of California Controller s Office. Furthermore, for funds held by the City which remain unclaimed, the City must make every effort to return such funds to the proper individuals per Government Code section Pursuant to a Solano Grand Jury findings that the City of Rio Vista agreed to develop policies and procedures regarding unclaimed funds, City staff agreed to develop such policies and procedures to comply with state requirements.

2 Page 2 REVIEW AND ANALYSIS There are two types of procedures that are covered under the proposed policy, 1) funds belonging to the City and held by the State of California and 2) funds held by the City belonging to an individual or organization. Funds held for the City: The State acquires unclaimed property through California's Unclaimed Property Law, which requires "holders" such as corporations, business associations, financial institutions, and insurance companies to annually report and deliver property to the Controller's Office after there has been no customer contact for three years. Often the owner forgets that the account exists, or moves and does not leave a forwarding address or the forwarding order expires. In some cases, the owner dies and the heirs have no knowledge of the property. The most common types of Unclaimed Property are: Bank accounts and safe deposit box contents Stocks, mutual funds, bonds, and dividends Uncashed cashier's checks or money orders Certificates of deposit Matured or terminated insurance policies Estates Mineral interests and royalty payments, trust funds, and escrow accounts. The Unclaimed Property law was enacted to prevent holders of Unclaimed Property from using your money and taking it into their business income. The City is one of the entities which at times is notices as having unclaimed funds held by the State. The Policy will outline the process the City will follow to assure that a periodic check of the State s website is conducted to determine if there are any unclaimed funds available to the City. Per the Policy, once per quarter, the treasurer shall access the State Controller s Unclaimed Property website at and search for any property which may be owed to City of Rio Vista. Searches should include City of Rio Vista, Rio Vista City, Rio Vista Police, Rio Vista Fire, or Rio Vista. These multiple searches should discover any abbreviations or incorrectly labeled account reports. Once the search is performed, any funds which may be recoverable will be claimed from the State Controller. Once received, any recovery should be deposited immediately into the appropriate account(s). This policy will require the Treasurer and at times the Finance Dept. staff to periodically search the State website and submit a claim for unclaimed property belonging to the City of Rio Vista.

3 Page 3 Funds held by the City: Government Section states that money, excluding restitution to victims, that is not the property of a local agency that remains unclaimed in its treasury for three years or more becomes the property of the local agency after proper notice is given. These are typically City issued checks and sometimes deposits that have been outstanding and unclaimed for more than three years. Government Code section further states that if such money becomes the property of a local agency and is in a special fund, the legislative body may transfer it to the General Fund. Checks generated by the City of Rio Vista Finance Department for all accounts payable and payroll are checks that would typically fall under this Policy. In accordance to law, the attached Escheat Policy requires the City to publish on its website or in a local newspaper a notice which shall state the amount, the name of the payee and the date of the check when issued of all unclaimed money. The unclaimed funds shall then become the property of the City on a designated date not less than forty-five days or more than sixty days after the first publication of the notice. Once per year, Finance Department staff shall prepare a listing of any stale dated checks which are one year old and under $15 or three years old and in excess of $50. The listing shall be published as a public notice in accordance with the requirement of Government Code Section 50051, in a newspaper of general circulation as well as on the City s website. If, upon publication of the list, a claim is made to recover an item on the list, the claimant shall present proof of identification and reasonable evidence the amounts are indeed due to them. Final determination to release the funds to the claimant will be made by the City Manager. Policy Considerations: 1. When unclaimed money is held in a special fund, once the money escheats to the City, the City Council, in its discretion, may allow the money to escheat to the special fund or to be transferred to the General Fund. Specifically, Government Code Section provides: When any such money becomes the property of a local agency and is in a special fund, the legislative body may transfer it to the general fund. 2. Some amounts of the unclaimed money in the City s possession is currently held in the utility funds. However, unclaimed money held in the utility funds is not the property of the utility funds because it is the result of overpayments, and therefore is not a fee for service rendered. Rather, the unclaimed money is simply being held in constructive trust for the true owners who failed to claim it. Allowing the unclaimed money to revert to the special funds would only benefit the ratepayers of those funds. Alternatively, unclaimed property which permanently escheats to the City from monies held in a special fund may be transferred to the General Fund to benefit all City residents.

4 Page 4 Staff is recommending that the City Council direct the City Manager to transfer permanently escheated unclaimed property held in any special fund to the City s General Fund pursuant to Government Code Section 50053, with the exception of any cost reimbursement necessary to comply with Proposition 218. FINANCIAL CONSIDERATIONS There is no immediate financial impact. ALTERNATIVES None Finance Manager City Manager Attachment: Resolution Escheat Policy Sample Public Notice Unclaimed Money Claim Form Claim Rejection Form Report and Resolution authorizing release of unclaimed Funds

5 RESOLUTION NO A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RIO VISTA ADOPTING PROCEDURES FOR UNCLAIMED FUNDS WHEREAS, from time to time checks issued by the City will remain un-cashed despite efforts made by City staff to make contact with the payees and re-issue the checks; and WHEREAS, the City Council is required to review and approve the City s Procedures for Unclaimed Funds; and WHEREAS, Sections of the Government Code of the State of California provide procedures for escheating un-cashed checks to the local agency if over one year old and less than $15.00 or over three years old and more than $15.00 following publication in the local newspaper; and WHEREAS, the City Council desires to adopt a Policy for the handling of un-cashed checks in accordance with Sections of the Government Code of the State of California. NOW THEREFORE BE IT RESOLVED, by the City Council of Rio Vista, that City of Rio Vista - Fiscal Policies- Escheat Policy for Unclaimed Money incorporated herein as Exhibit A is hereby approved by the City Council. PASSED, APPROVED, AND ADOPTED this seventeenth day of November 2011 by the following roll call vote: AYES: NOES: ABSENT: ABSTAIN: ATTEST: Anna Olea-Moger, CMC City Clerk

6 Policy No. Date: Page 1 of 3 CITY OF RIO VISTA UNCLAIMED FUNDS POLICY I. PURPOSE The purpose of this policy is to establish procedures for identifying unclaimed funds, complying with noticing requirements set forth in Government Code, developing accounting procedures, and developing claim requirements for unclaimed funds. II. SCOPE This applies to the city Treasurer and/or the Finance Department for the City of Rio Vista. III. POLICY A. Funds held by California State Controller s Office 1. As a public entity the CITY can claim funds held by the California State Controller s Office. 2. The Treasurer and at times the Finance Dept. staff shall perform at a minimum, on a quarterly basis, a web search on the California State Controller s Office Unclaimed Property website. Upon finding an account(s) that belong to the City of Rio Vista, the Treasurer shall file a claim with the California State Controllers Office. 3. The Treasurer shall assure that the claim filed is properly concluded by either receiving a rejection notice from the State stating the City is not entitled to the unclaimed property or receipt of the funds. B. Funds held by City of Rio Vista 1. Funds that are not the property of the City of Rio Vista that remain unclaimed for a period of more than three (3) years is the property of the City of Rio Vista fortyfive (45) days after the initial public notice if not claimed or if no verified complaint is filed and served. (Sections and 50051)

7 Policy No. Date: Page 2 of 3 2. At any time after the expiration of the three (3) year period, the Treasurer of the City of Rio Vista may cause a notice to be published once a week for two successive weeks in a newspaper of general circulation published in the City of Rio Vista. (Section 50050) 3. The notice shall include the following information a. The individual or business name as shown on the issued check b. The amount of the issued check c. The fund in which it is held. d. A statement announcing that the funds shall become the property of the City of Rio Vista on a date that is not less than forty-five (45) days after the publication of the notice. See Exhibit I (Section 50051) 4. Upon or prior to publication, a party of interest may file a claim which must include the following information: a. The claimant s name, address and telephone number b. Social Security Number or Federal Employer Identification Number. c. Proof of identity such as a copy of a drivers license, social security card or birth certificate. d. Amount of the claim. e. The grounds on which the claim is founded. See Exhibit II (Section 50052) 5. The Treasurer shall recommend to the City Manager release to the depositor of the unclaimed funds, their heir, beneficiary, or duly appointed representative, unclaimed funds if claimed prior to the date the funds becomes the property of the City of Rio Vista upon submitting proof satisfactory to the Treasurer. (Section ) 6. When the unclaimed funds become the property of the City of Rio Vista, the City Council may transfer them by resolution to the funds upon which the funds was originally drawn. (Section 50053) 7. Any individual item of less than fifteen ($15) dollars or any amount, if the depositor s name is unknown, which remains unclaimed for a period of one (1) year may be transferred to the General Fund by the City Council without the necessity of public notification in a newspaper. (Section 50055) 8. The responsibilities of the Treasurer may be delegated by the Treasurer to the department that maintains the supporting records of the uncleared checks based on the initial receipt of deposit of that funds or both. (Section 50056)

8 Policy No. Date: Page 3 of 3 4. Unclaimed amounts over one year old shall be posted on the CITY s website. C. Disbursement and Funds Transfer The Treasurer of the City of Rio Vista will review the Claim Forms and recommend to the City Manager approval or rejection of the claim. 1. Once approved, the Finance Department may release the unclaimed money to the depositor of the unclaimed money, their heir, beneficiary, or duly appointed representative, except as otherwise noted in this policy if: a. Claim is filed prior to the date the money becomes the property of the City of Rio Vista. b. Proof substantiating the claim is conveyed in writing, including all items detailed in item D of Section III(B) of this policy. 2. Upon rejection of said depositor s claim by the Treasurer, the depositor may file a verified complaint seeking to recover all, or a designated part, of the money in a court within Solano County. The Treasurer shall be served a copy of the complaint and summons which must be served within thirty (30) days of receiving notice that the claim was rejected. The Treasurer shall withhold the release of the portion of unclaimed money for which a court action has been filed until a decision is rendered by the court. 3. Upon the close of business on the forty-fifth (45) day after publication of the first notice, the unclaimed checks become the property of the City of Rio Vista. IV. EXCEPTIONS There will be no exceptions to this policy unless provided and approved in writing by the City Manager and/or the City Attorney. V. REFERENCES 1. California Government code Sections, State Controller Publication, Unclaimed Property Law and Regulations

9 Exhibit I Sample of Public Notice CITY OF RIO VISTA PUBLIC NOTICE The following list of disbursements are unclaimed by the listed payees and held by the City of Rio Vista. If you have a claim against these funds, please contact the City of Rio Vista City Treasurer, 1 Main Street, Rio Vista, CA 94571, phone (707) Proper proof of claim and current identification must be provided before funds will be released. Funds not claimed by become the property of the City of Rio Vista. This notice and its contents are in accordance with California Government Code Section Check Date Check Number Amount Payee City Treasurer

10 Exhibit II Escheated Money Claim Form CITY OF RIO VISTA UNCLAIMED MONEY CLAIM FORM Return completed form to: City of Rio Vista Finance Department 1 Main Street Rio Vista, CA Pursuant to California Government Code Section 50052, I wish to file a claim for a previously unclaimed check in the amount of $ that was published in the Rio Vista Herald on. The grounds on which I file this claim are: Vendor or Individual Name (Printed) Taxpayer I.D. or Social Security No. Vendor or Individual Name(Signature) Telephone Number Address City/State/Zip Code For Finance Department Only Proof of Identity Verified: Check One: Drivers License Social Security Card Birth Certificate Verified by: Date: Claim: Approved Rejected Reason for Rejection: Reviewed By: Date:

11 Exhibit III Escheated Money Claim Form CITY OF RIO VISTA MONEY CLAIM REJECTION FORM The City of Rio Vista has rejected the unclaimed property claim of: Vendor or Individual Name: Taxpayer I.D. or Social Security Number: Address: City/State/Zip Code: Original check date: Original Check Amount: The grounds on which this claim has been rejected are: Under California Government Code Section 50052, you have the right to file a verified complaint seeking to recover all, or a designated part, of the money in a court of competent jurisdiction within Solano County. A copy of the complaint and the summons issued thereon must be served within thirty (30) days of receiving this notice of rejection. Upon being served, the Treasurer will withhold the disputed amount from being released until a decision is rendered by the court. City Treasurer

12 Exhibit IV Example of Staff Report to Authorize the Release of Unclaimed Checks SUBJECT: Adoption of a Resolution Authorizing the release of unclaimed checks MEETING DATE: RECOMMENDATION: Adopt a Resolution Authorizing the release of unclaimed checks pursuant to California Government Code Section 50050, and to the City of Rio Vista. BACKGROUND: Section of the Government Code of the State of California allows for unclaimed checks which have been held over three (3) years to become the property of the local agency after notice if not claimed and if no verified complaint is filed and served. REVIEW AND ANALYSIS: Section of the California Government Code outlines the notification process for escheating unclaimed checks, and Section describes the claiming process. Attached is a listing of all outstanding checks that meet this criteria. Section authorizes the transfer without publication of checks under $15.00 which are more than one year old. FISCAL CONSIDERATION: $XX.XX amount will increase revenue in XXX-XXXX-XXX-XXXX Unclaimed Property in the Funds upon which the original check was drawn. This will be offset by publication costs. Attachments: Listing of Unclaimed Checks over 3 years old and checks under $15.00 which are more than one year old.

13 Exhibit V Example of Resolution to Authorize the Release of Escheated Money RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RIO VISTA AUTHORIZING THE RELEASE OF UNCLAIMED MONIES PURSUANT TO SECTION OF THE GOVERNMENT CODE OF THE STATE OF CALIFORNIA WHEREAS, Sections of the California Government Code outlines the process for the notification process of the unclaimed checks; and WHEREAS, Section of the California Government Code allows for unclaimed checks of less than $15 or any amount if the depositor s name is unknown, to become the property of the local agency after a period of one (1) year without the necessity of publication of a notice in a newspaper: and WHEREAS, Section of the California Government Code allows for unclaimed checks more than three years old to become the property of the local agency following publication in the local newspaper; and WHEREAS, each of the checks listed on the attached summary meets this criteria. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Rio Vista does hereby transfer the unclaimed checks on the attached list in the total amount of $X,XXX.XX to the General Fund of the City of Rio Vista in accordance with the provisions of Sections of the California Government Code. PASSED AND ADOPTED by the City Council of the City of Rio Vista on this XX day of XXXXXX, 2011 by the following vote: AYES: NOES: ABSENT: ABSTAIN: ATTEST: Anna Olea-Moger, CMC City Clerk