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RES-2007-105RESOLUTION NO. 2007R 1 05 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM RELATING TO FEES FOR RETURNED CHECKS TENDERED IN PAYMENT OF OBLIGATIONS AND RESCINDING RESOLUTION NO. 91 R -304 WHEREAS, Section 1.01.400 of the Anaheim Municipal Code authorizes the City Council to establish a handling fee for checks and other instruments returned or otherwise dishonored by any bank or other paying institution; and WHEREAS, the City Council heretofore adopted Resolution No. 91R-304 establishing such a fee; and WHEREAS, the City Council desires, and by this Resolution intends, to revise said fee in the manner hereinafter set forth; and WHEREAS, said fee does not exceed the reasonable cost to the City of Anaheim of processing and handling said checks and other instruments returned or otherwise dishonored. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Anaheim that a handling fee of Twenty Five Dollars ($25.00) is hereby established pursuant to Section 1.01.400 of the Anaheim Municipal Code for each check or other negotiable instrument tendered to the City as payment for any debt or obligation due and owing to the City and which check or instrument is returned due to insufficient funds, or a stop payment order, or for any other reason dishonored by any paying bank or institution. BE IT FURTHER RESOLVED that, notwithstanding the preceding paragraph, the City Treasurer or his or her designee (hereinafter collectively referred to as the "City Treasurer ")may waive payment of any or all of said fee otherwise due and payable to the City pursuant to the preceding paragraph provided that the City Treasurer finds and determines that either (i) the person or entity tendering said check or instrument to the City and otherwise responsible for payment of said fee (hereinafter referred to as the "obligor could not have reasonably foreseen that such check or instrument would be dishonored; or (ii) such waiver is otherwise reasonably necessary to avoid an unjust penalty upon the obligor. Prior to approving any such waiver, the City Treasurer shall require written proof from the obligor justifying such waiver, Approval or denial of such waiver shall be at the sole discretion of the City Treasurer. The decision of the City Treasurer with regard to any such waiver shall be final and conclusive. In the event any fee or portion thereof is waived pursuant to the provisions of this resolution, the findings required in connection therewith shall be set forth in writing and maintained in the books or records of the City Treasurer and shall be maintained on file in the office of the City Treasurer for a minimum of two years following the date of such waiver. BE IT FURTHER RESOLVED that Resolution No. 91 R -304 be, and the same is, hereby rescinded, provided, however, any payment obligation heretofore accruing pursuant to the terms of Resolution No. 91R-304 shall be unaffected by such rescission. THE FOREGOING RESOLUTION is approved and adopted by the City Council of the City of Anaheim this 19th day of June 2007, by the following roll call vote: AYES: Mayor Pringle, Council Members Hernandez, Sidhu, Galloway, Kring NOES: NONE ABSENT: NONE ABSTAIN: NONE ATTEST: 65235.1/bgranato /4 -12 -07 MAYOR OF THEFT►F ANAHEIM RESOLUTION NO. 91R -304 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM RELATING TO FEES FOR RETURNED CHECKS TENDERED IN PAYMENT OF OBLIGATIONS AND RESCINDING RESOLUTION NO. 87R -135 WHEREAS, Section 1.01.400 of the Anaheim Municipal Code authorizes the. City Council to establish a handling fee for checks and other instruments returned or otherwise dishonored by any bank or other paying institution and WHEREAS, the City Council heretofore adopted Resolution No. 87R -135 establishing such a fee; and WHEREAS, the City Council desires and by this Resolution intends to revise said fee in the manner hereinafter set forth; and WHEREAS, said fee does not exceed the reasonable cost to the City of Anaheim of processing and handling said checks and other instruments returned or otherwise dishonored. NOW, THEREFORE, BE IT RESOLVED by the City Council that a handling fee of Fifteen Dollars ($15.00) is hereby established pursuant to Section 1.01.400 of the Anaheim Municipal Code for each check or other negotiable instrument tendered to the City as payment for any debt or obligation due and owing to the City and which check or instrument is returned due to insufficient funds, or a stop payment order, or for any other reason dishonored by any paying bank or institution. BE IT FURTHER RESOLVED that, notwithstanding the preceding paragraph,, the City Treasurer or his or her designee (hereinafter collectively referred to as the "City Treasurer may waive payment of any or all of said fee otherwise due and payable to the City pursuant to the preceding paragraph provided that the City Treasurer finds and determines that either: (i) the person or entity tendering said check or instrument to the City and otherwise responsible for payment of said fee (hereinafter referred to as the "obligor could not have reasonably foreseen that such check or instrument would be dishonored; or (ii) such waiver is otherwise reasonably necessary to avoid an unjust penalty upon the obligor. Prior to approving any such waiver, the City Treasurer shall require written proof from the obligor justifying such waiver. Approval or denial of such waiver shall be at the sole discretion of the City Treasurer. The decision of the City Treasurer with regard to any such waiver shall be final and conclusive. In the event any fee or portion thereof is waived pursuant to the provisions of this resolution, the findings required in connection therewith shall be set forth in writing and maintained in the books or records of the City Treasurer and shall be maintained on file in the office of the City Treasurer for a minimum of two years following the date of any such waiver. BE IT FURTHER RESOLVED that Resolution No. 87R -135 be, and the same is hereby, rescinded provided, however, any payment obligation heretofore accruing pursuant to the terms of Resolution N. 87R -135 shall be unaffected by such rescission. THE FOREGOING RESOLUTION is approved and adopted by the City Council of the City of Anaheim this 5th day of November 1991. ATTEST: ASSISTANT CITY CL OF THE TY OF ANAHEIM MA OR OF THE CITY ANAHEIM CALIFORNIA CIVIL CODE SECTION 1719 1719. (a) (1) Notwithstanding any penal sanctions that may apply, any person who passes a check on insufficient funds shall be liable to the payee for the amount of the check and a service charge payable to the payee for an amount not to exceed twenty -five dollars ($25) for the first check passed on insufficient funds and an amount not to exceed thirty -five dollars ($35) for each subsequent check to that payee passed on insufficient funds. (2) Notwithstanding any penal sanctions that may apply, any person who passes a check on insufficient funds shall be liable to the payee for damages equal to treble the amount of the check if a written demand for payment is mailed by certified mail to the person who had passed a check on insufficient funds and the written demand informs this person of (A) the provisions of this section, (B) the amount of the check, and (C) the amount of the service charge payable to the payee. The person who had passed a check on insufficient funds shall have 30 days from the date the written demand was mailed to pay the amount of the check, the amount of the service charge payable to the payee, and the costs to mail the written demand for payment. If this person fails to pay in full the amount of the check, the service charge payable to the payee, and the costs to mail the written demand within this period, this person shall then be liable instead for the amount of the check, minus any partial payments made toward the amount of the check or the service charge within 30 days of the written demand, and damages equal to treble that amount, which shall not be less than one hundred dollars ($100) nor more than one thousand five hundred dollars ($1,500). When a person becomes liable for treble damages for a check that is the subject of a written demand, that person shall no longer be liable for any service charge for that check and any costs to mail the written demand. (3) Notwithstanding paragraphs (1) and (2), a person shall not be liable for the service charge, costs to mail the written demand, or treble damages if he or she stops payment in order to resolve a good faith dispute with the payee. The payee is entitled to the service charge, costs to mail the written demand, or treble damages only upon proving by clear and convincing evidence that there was no good faith dispute, as defined in subdivision (b). (4) Notwithstanding paragraph (1), a person shall not be liable under that paragraph for the service charge if, at any time, he or she presents the payee with written confirmation by his or her financial institution that the check was returned to the payee by the financial institution due to an error on the part of the financial institution. (5) Notwithstanding paragraph (1), a person shall not be liable under that paragraph for the service charge if the person presents the payee with written confirmation that his or her account had insufficient funds as a result of a delay in the regularly scheduled transfer of, or the posting of, a direct deposit of a social security or government benefit assistance payment. (6) As used in this subdivision, to "pass a check on insufficient funds" means to make, utter, draw, or deliver any check, draft, or order for the payment of `money upon -any bank, depository, person, firm, or corporation that refuses to honor the check, draft, or order for any of the following reasons: Page 1 (A) Lack of funds or credit in the account to pay the check. (8) The person who wrote the check does not have an account with the drawee. (C) The person who wrote the check instructed the drawee to stop payment on the check. (b) For purposes of this section, in the case of a stop payment, the existence of a "good faith dispute" shall be determined by the trier of fact. A "good faith dispute" is one in which the court finds that the drawer had a reasonable belief of his or her legal entitlement to withhold payment. Grounds for the entitlement include, but are not limited to, the following: services were not rendered, goods were not delivered, goods or services purchased are faulty, not as promised, or otherwise unsatisfactory, or there was an overcharge. (c) In the case of a stop payment, the notice to the drawer required by this section shall be in substantially the following form: NOTICE To: (name of drawer) is the payee of a check you wrote (name of payee) for The check was not paid because (amount) you stopped payment, and the payee demands payment. You may have a ..good faith dispute as to whether you owe the full amount. If you do ..not have a good faith dispute with the payee and fail to pay the ,.payee the full amount of the check in cash, a service charge of an ..amount not to exceed twenty-five dollars ($25) for the first check ..passed on insufficient funds and an amount not to exceed thirty -five dollars ($35) for each subsequent check passed on insufficient funds, and the costs to mail this notice within 30 days after this notice was mailed, you could be sued and held responsible to pay at least both of the following: (1) The amount of the check. (2) Damages of at least one hundred dollars ($100) or, if higher, three times the amount of the check up to one thousand five hundred dollars ($1,500). If the court determines that you do have a good faith dispute with the payee, you will not have to pay the service charge, treble damages, or mailing cost. If you stopped payment because you have a good faith dispute with the payee,, you should try to work out your dispute with the payee. You can contact the payee at: (name of payee) (street address) (telephone number) You may wish to contact a lawyer to discuss your legal rights and responsibilities, (name of sender of notice) Page 2 (d) In the case of a stop payment, a court may not award damages or costs under this section unless the court receives into evidence a copy of the written demand that, in that case, shall have been sent to the drawer and a signed certified mail receipt showing delivery, or attempted delivery if refused, of the written demand to the drawer' s last known address. (e) A cause of action under this section may be brought in small claims court by the original payee, if it does not exceed the jurisdiction of that court, or in any other appropriate court. The payee shall, in order to recover damages because the drawer instructed the drawee to stop payment, show to the satisfaction of the trier of fact that there was a reasonable effort on the part of the payee to reconcile and resolve the dispute prior to pursuing the dispute through the courts. (f) A cause of action under this section may be brought by a holder of the check or an assignee of the payee. A proceeding under this section is a limited civil case. However, if the assignee is acting on behalf of the payee, for a flat fee or a percentage fee, the assignee .may not charge the payee a greater flat fee or percentage fee for that portion of the amount collected that represents treble damages than is charged the payee for collecting the face amount of the check, draft, or order. This subdivision shall not apply to an action brought in small claims court. (g) Notwithstanding subdivision (a), if the payee is the court, the written demand for payment described in subdivision (a) may be mailed to the drawer by the court clerk. Notwithstanding subdivision (d), in the case of ,a stop payment where the demand is mailed by the court clerk, a court may not award damages or costs pursuant to subdivision (d), unless the court receives into evidence a copy of the written demand, and a certificate of mailing by the court clerk in the form provided for in subdivision (4) of Section 1013a of the Code of Civil Procedure for service in civil actions. For purposes of this subdivision, in courts where a single court clerk serves more than one court, the clerk shall be deemed the court clerk of each court. (h) The requirements of this section in regard to remedies are mandatory upon a court. (i) The assignee of the payee or a holder of the check may demand, recover, or enforce the service charge, damages, and costs specified in this section to the same extent as the original payee. (j) (1) A drawer is liable for damages and costs only if all of the requirements of this section have been satisfied. (2) The drawer shall in no event be liable more than once under this section on each check for a service charge, damages, or costs. (k) Nothing in this section is intended to condition, curtail., or otherwise prejudice the rights, claims, remedies, and defenses under Division 3 (commencing with Section 3101) of the Commercial Code of a drawer, payee, assignee, or holder, including a holder in due course as defined in Section 3302 of the Commercial Code, in connection with the enforcement of this section. Page 3 i a e petit Utilities CSR III 25 minutes 24.02 22% burden 12.31 Collections S ecialist 10 minutes 21.65 22% burden 4.50 Treas Accountin Technician 15 minutes 26.43 22% burden 8.07 COST STUDY SUMMARY SURVEY OF LOCAL CITIES' RETURN CHECK FEES Brea Buena Park Fullerton Garden Grove Irvine Orange Santa Ana 714- 990 -7676 714 -562 -3736 714 -73 8 -6520 714- 741 -5074 949 724 -6033 714 -744 -2230 714 647 -5440 25.00 25.00 25.00 25.00 15.00 20.00 25.00 25.00 MONTHLY AVERAGE RETURNS Jul 05 Aug 05 Sep 05 Oct 05 Nov 05 Dec 05 Jan 06 Feb 06 Mar 06 Apr 06 May 06 Jun 06 140 177 155 173 140 148 135 128 124 100 126 131 77"' 30 31 32 43 49 42 34 49 35 35 29 34 170 208 187 216 189 190 169 177 159 135 155 165 Average number of monthly check returns: 140 Average number of monthly ACH returns: 37 DEPARTMENT RETURN ITEM PROCESSING AVERAGE COSTS Utilities Single Return Item with Standard Collections/Treasury Costs Maintenance Single Return Item with Standard Collections/Treasury Costs Building Single Return Item with Standard Collections/Treasury Costs e petit Maintenance Mgmt Assistant 30 minutes 26.76 22% burden 16.33 Collections Specialist 10 minutes 21.65 22% burden 4.50 Treasury Accounting Technician 15 minutes 26.43 22% burden 8.07 5 e. !ti� COST STUDY SUMMARY SURVEY OF LOCAL CITIES' RETURN CHECK FEES Brea Buena Park Fullerton Garden Grove Irvine Orange Santa Ana 714- 990 -7676 714 -562 -3736 714 -73 8 -6520 714- 741 -5074 949 724 -6033 714 -744 -2230 714 647 -5440 25.00 25.00 25.00 25.00 15.00 20.00 25.00 25.00 MONTHLY AVERAGE RETURNS Jul 05 Aug 05 Sep 05 Oct 05 Nov 05 Dec 05 Jan 06 Feb 06 Mar 06 Apr 06 May 06 Jun 06 140 177 155 173 140 148 135 128 124 100 126 131 77"' 30 31 32 43 49 42 34 49 35 35 29 34 170 208 187 216 189 190 169 177 159 135 155 165 Average number of monthly check returns: 140 Average number of monthly ACH returns: 37 DEPARTMENT RETURN ITEM PROCESSING AVERAGE COSTS Utilities Single Return Item with Standard Collections/Treasury Costs Maintenance Single Return Item with Standard Collections/Treasury Costs Building Single Return Item with Standard Collections/Treasury Costs Building Staf f 45 minutes 17.44 22% burden 15.96 Collections Specialist 10 minutes 21.65 22% burden 4.50 Treasury Accounting Technician 15 minutes 26.43 22% burden 8.07 COST STUDY SUMMARY SURVEY OF LOCAL CITIES' RETURN CHECK FEES Brea Buena Park Fullerton Garden Grove Irvine Orange Santa Ana 714- 990 -7676 714 -562 -3736 714 -73 8 -6520 714- 741 -5074 949 724 -6033 714 -744 -2230 714 647 -5440 25.00 25.00 25.00 25.00 15.00 20.00 25.00 25.00 MONTHLY AVERAGE RETURNS Jul 05 Aug 05 Sep 05 Oct 05 Nov 05 Dec 05 Jan 06 Feb 06 Mar 06 Apr 06 May 06 Jun 06 140 177 155 173 140 148 135 128 124 100 126 131 77"' 30 31 32 43 49 42 34 49 35 35 29 34 170 208 187 216 189 190 169 177 159 135 155 165 Average number of monthly check returns: 140 Average number of monthly ACH returns: 37 DEPARTMENT RETURN ITEM PROCESSING AVERAGE COSTS Utilities Single Return Item with Standard Collections/Treasury Costs Maintenance Single Return Item with Standard Collections/Treasury Costs Building Single Return Item with Standard Collections/Treasury Costs