State Government Code section 935.4 authorizes City Council to delegate by resolution the authority to an employee to handle, process, compromise, or settle claims against the City up to $50,000.  The procedures for the handling and settling of claims was last updated by Council Resolution in 1992. That resolution established administrative procedures for the settlement of claims made against the City and authorized staff to settle claims up to $15,000.  Settlements greater than $15,000 require City Council approval.  There are currently no Council approved procedures for the collection of delinquent accounts or the writing off of uncollectible debts owing to the City.

The current policy is outdated and does not reflect current or best practices.  The proposed Resolution will align the risk management policy with current procedures, authorize City staff to deny claims when appropriate, provide higher settlement authority to staff to efficiently settle claims when appropriate, and to establish authority to write off uncollectible debts owed to the City. 

The proposed Resolution will increase the City Manager’s current settlement authority from $15,000 to $25,000, however, will continue to require City Attorney and the Finance Director’s concurrence for various settlement amounts.  Settlement limits are proposed as follows:

A survey of other cities’ settlement authority thresholds was conducted and the proposed $25,000 authority limit is within the range other agencies have established.   

The proposed Resolution also promotes financial management best practices by providing authority for the collection of delinquent accounts and adopting procedures for the writing off of uncollectible debts owing to the City. An analysis of the City’s aging accounts receivable was done and a survey of other cities’ procedures and authority thresholds for writing off uncollectible debt was conducted. Based on the analysis and findings, the proposed Resolution authorizes staff to write off as an uncollectible debt any delinquent obligation owing to the City in excess of ninety (90) days and up to $10,000.  The proposed Resolution would repeal and replace Resolution No. 7519-92, and would re-establish or clarify other administrative procedures related to tort and other legal claims. 

It is recommended that the City Council:

•  Adopt the attached Resolution establishing procedures and delegating authority for processing and settlement of claims and litigation against the City; settlement of claims made and litigation initiated by the City; collection of delinquent accounts owing to the City; and repealing Resolution No. 7519-92.