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HomeMy WebLinkAboutReso 91-482 - Establishing and Adopting a policy regarding uncollectible general accounts receivable RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDDING ESTABLISHING AND ADOPTING A POLICY REGARDING UNCOLLECTIBLE GENERAL ACCOUNTS RECEIVABLE. WHEREAS, the City Council of the City of Redding is charged with the responsibility of establishing municipal policies to guide the various functions of the City and, where necessary, to establish procedures by which functions are performed; and WHEREAS, regulatory policies established by the City Council are usually adopted by Ordinance and included in the Municipal Code. However, other policies are also established, which by their nature do not require adoption by Ordinance; these policy statements, adopted by Resolution of the City Council, need to be consolidated in a reference document for easy access; and WHEREAS, on August 4, 1987, by Resolution No. 87-261, City Council adopted a Council Policy Manual to achieve said objectives; and WHEREAS, City Council wishes to establish a policy regarding uncollectible general accounts receivable, a copy of which is attached hereto and incorporated herein by reference; NOW, THEREFORE, IT IS HEREBY RESOLVED by the City Council of the City of Redding as follows: 1. That all of the above recitals are true and correct. 2 . That the Policy attached hereto be and hereby is adopted as the Council Policy Regarding General Accounts Receivable of the City of Redding. 3 . That said Policy be incorporated in the Council Policy Manual. I HEREBY CERTIFY that the foregoing Resolution was introduced and read at a regular meeting of the City Council of the City of Redding on the 5th day of November 1991 , and was duly adopted at said meeting by the following vote: AYES: COUNCIL MEMBERS: Arness, Buffum, Fulton, Moss & Dahl NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: None ABSTAIN: COUNCIL MEMBERS: None MIKE DAHL, Mayor City of Redding ATTEST: ETHEL A. NICHOLS, City Clerk FORM PPROVED: -/ZA., RAJDALL A. HAYS, ity Attorney 2 CITY OF REDDING, CALIFORNIA COUNCIL POLICY SUBJECT RESOLUTION POLICY EFFECTIVE PAGE NUMBER NUMBER DATE POLICY REGARDING UNCOLLECTIBLE GENERAL ACCOUNTS RECEIVABLE 410 1 BACKGROUND The Finance Department is charged with the with responsibility of administering General Accounts Receivable for the City . After due diligence collection efforts by the City, uncollectible accounts are customarily written off and handled depending on dollar impact in one of the following manners: (1) Referred to collection agencies with which the City has a contractual rela- tionship; (2) Referred to the City Attorney for recovery through the courts; (3) Filed as claims in Small Claims Court by Finance staff; or (4) Handled by Finance staff based on a case-by-case analysis as deemed appropriate. PURPOSE The goal of the Policy on Uncollectible General Accounts Receiv- able is the efficient handling of uncollectible accounts for which referral to collection agencies or the courts would be futile and not cost effective. POLICY The Director of Finance shall have the authority to write off and clear as uncollectible any general account receivable for which the balance due the City is less then $5 ,000 meeting the follow- ing criteria: 1 . Where the debtor is determined to be deceased with no surviv- ing spouse and Finance staff has ascertained that the individ- ual ' s estate is insufficient to pay the amount due, with such finding supported by official agency (police , coroner) docu- mentation, where Finance staff has determined through re- search that decedent debtor has or is unlikely to have suffi- cient discoverable assets or resources to clear the debt. 2 . Where the debtor is determined to be physically incapacitated to such an extent that determination of the probability of his/her regaining the ability to pay the debt is doubtful or impractical, e.g. , chronic vegetative state, coma, etc. , as supported by a written statement from the debtor' s physician. 3 . Where the debtor is determined to be incarcerated in a state prison for a long-term commitment, i.e. , over one year, requiring an unreasonable and non-cost-effective effort on the part of Finance staff to track subsequent ability to pay 16 CR 0049 CITY OF REDDING, CALIFORNIA COUNCIL POLICY SUBJECT RESOLUTION POLICY EFFECTIVE PAGE NUMBER NUMBER DATE POLICY REGARDING UNCOLLECTIBLE GENERAL ACCOUNTS RECEIVABLE 410 2 the debt following the debtor' s release . (Where the debtor has been sentenced to local county facility commitment as part of a grant of probation, i.e. , less than one year, the matter will be referred to a collection agency. If the debt is one for which the sentencing court has ordered restitution and named the City as the victim to receive restitution, there may be some recourse through the Probation Department. ) 4 . Where the debtor is determined to be housed in a mental health facility for a period of such length or lack of defini- tion that determination of the debtor ' s ability to pay the debt subsequent to release would be problematic and/or unrea- sonable, as supported by the written statement of an attend- ing mental health care provider. 5 . Where it is determined that the debtor' s sole source of income is a grant from a social services program (AFDC, SSI , etc. ) against which a creditor is prevented from lodging a lien. (the mere fact that a debtor is found to be the recipi- ent of such aid would not prevent a reasonable effort to determine whether the debtor possesses other assets or re- sources against which a lien could be lodged, other than the granting social service agency resource. 6 . Where the claim cannot be supported by documentation as to the debtor' s responsibility with regard to the claim, e.g. , upon receipt of information that the debtor was wrongly named as the responsible party by the reporting agency or that the contractual arrangement giving rise to the claim no longer exists. The City Manager and/or City Council shall have the authority to approve the write-off as uncollectible of any general account receivable meeting the above criteria for which the blance due the City is equal to or in excess of $5 , 000 . PROCEDURE Finance staff will submit an Interdepartment Communication to the Director of Finance or City Manager, based upon the amount due, detailing the facts , alternatives , and recommendation for clear- ance. This document will contain language allowing the City Manager or Director of Finance to sign, indicating agreement or disagreement with the recommendation. Were the City Manager or Director of Finance to disagree with the staff recommendation, an alternative course of action would be recommended by that individ- ual to Finance staff. Following approval, the account balance will be adjusted to zero. OR 0049 CITY OF REDDING, CALIFORNIA COUNCIL POLICY SUBJECT RESOLUTION POLICY EFFECTIVE PAGE NUMBER NUMBER DATE POLICY REGARDING UNCOLLECTIBLE GENERAL ACCOUNTS RECEIVABLE 410 1 BACKGROUND The Finance Department is charged with the responsibility of administering General Accounts Receivable for the City. After due diligence collection efforts by the City, uncollectible accounts are customarily written off and handled depending on dollar impact in one of the following manners: (1) Referred to collection agencies with which the City has a contractual rela- tionship; (2) Referred to the City Attorney for recovery through the courts; (3) Filed as claims in Small Claims Court by Finance staff; or (4) Handled by Finance staff based on a case-by-case analysis as deemed appropriate. PURPOSE The goal of the Policy regarding Uncollectible General Accounts Receivable is the efficient handling of uncollectible accounts for which referral to collection agencies or the courts would be futile and not cost effective. POLICY The Director of Finance shall have the authority to write off and clear as uncollectible any general account receivable for which the balance due the City is less than $5 ,000 meeting the follow- ing criteria: 1 . Where the debtor is determined to be deceased with no surviv- ing spouse and Finance staff has ascertained that the individ- ual' s estate is insufficient to pay the amount due, with such finding supported by official agency (police, coroner) docu- mentation, where Finance staff has determined through re- search that decedent debtor has or is unlikely to have suffi- cient discoverable assets or resources to clear the debt. 2 . Where the debtor is determined to be physically incapacitated to such an extent that determination of the probability of his/her regaining the ability to pay the debt is doubtful or impractical, e.g. , chronic vegetative state, coma, etc. , as supported by a written statement from the debtor' s physician. 3 . Where the debtor is determined to be incarcerated in a state prison for a long-term commitment, i.e. , over one year, requiring an unreasonable and non-cost-effective effort on the part of Finance staff to track subsequent ability to pay CR 0049 CITY OF REDDING, CALIFORNIA COUNCIL POLICY SUBJECT RESOLUTION POLICY EFFECTIVE PAGE NUMBER NUMBER DATE POLICY REGARDING UNCOLLECTIBLE GENERAL ACCOUNTS RECEIVABLE 410 the debt following the debtor' s release. (Where the debtor has been sentenced to local county facility commitment as part of a grant of probation, i.e. , less than one year, the matter will be referred to a collection agency. If the debt is one for which the sentencing court has ordered restitution and named the City as the victim to receive restitution, there may be some recourse through the Probation Department. ) 4 . Where the debtor is determined to be housed in a mental health facility for a period of such length or lack of defini- tion that determination of the debtor' s ability to pay the debt subsequent to release would be problematic and/or unrea- sonable, as supported by the written statement of an attend- ing mental health care provider. 5 . Where it is determined that the debtor' s sole source of income is a grant from a social services program (AFDC, SSI, etc. ) against which a creditor is prevented from lodging a lien. (The mere fact that a debtor is found to be the recipi- ent of such aid would not prevent a reasonable effort to determine whether the debtor possesses other assets or re- sources against which a lien could be lodged, other than the granting social service agency resource. ) 6 . Where the claim cannot be supported by documentation as to the debtor' s responsibility with regard to the claim, e.g. , upon receipt of information that the debtor was wrongly named as the responsible party by the reporting agency or that the contractual arrangement giving rise to the claim no longer exists. The City Manager shall have the authority to approve the write- off as uncollectible of any general account receivable meeting the above criteria for which the balance due the City is equal to or in excess of $5 ,000 , but less than $10,000 . The City Council shall .. have such authority with regard to any general account receivable for which the balance due the City is equal to or in excess of $10 ,000. PROCEDURE Where the amount of the City' s claim is less than $10 ,000 , Fi- nance staff will submit an Interdepartment Communication to the City Manager or the Director of Finance, depending upon the amount due, detailing the facts, alternatives, and recommendation for clearance. This document will contain language allowing the City Manager or Director of Finance to sign, indicating agreement or disagreement with the recommendation. Were the City Manager CR 0049 C171 Y OF REDDING, CALIFORNIA COUNCIL POLICY SUBJECT RESOLUTION POLICY EFFECTIVE PAGE NUMBER NUMBER DATE POLICY REGARDING UNCOLLECTIBLE GENE or Director of Finance to disagree with the staff recommendation, an alternative course of action would be recommended to Finance staff. Where the amount of the City' s claim is equal to or in excess of $10, 000 , the Director of Finance will submit a report to the City Council containing a request for write-off and detailing the facts supporting such a recommendation. The City Council' s agreement or disagreement with such recommendation will be record- ed in City Council minutes. Following approval, the account balance will be adjusted to zero. CR 0049